CEOs see bright future despite Corona, politics

Tuesday, October 5th, 2021 00:00 | By
Business prospects are especially higher for firms in healthcare, security and manufacturers of medical supplies. Photo/File

Most CEOs are optimistic about business activity for the Fourth Quarter of this year despite the pandemic and heightened political activities, a survey by the Central Bank of Kenya (CBK) shows. 

The banking sector regulator said business leaders interviewed expect an increase in business activity owing to seasonal spending.

“Whereas the Covid-19 pandemic continues to be a significant factor that could constrain expansion of private sector firms over the next one year, respondents appreciate that the roll-out of vaccines has moderated its impact and firms have also instituted measures to adjust to the pandemic,” it said. 

However, according to the Monetary Policy Committee CEO’s Survey for September 2021, there is increasing concern over high input costs and heightened political activity in the country with the attendant possible negative impact on economic activity. 

Business activity

The business leaders are calling for a reduction in the cost of credit, rollback of taxation policies and implementation of an effective stimulus program. 

“In particular, the CEOs recommended reduction in cost of borrowing, lower taxation especially excise duty and VAT which is impacting demand negatively and a review of constraining regulatory requirements that are hampering foreign investments,” the survey notes.

The CEOs also said that businesses were being impacted by increased counterfeit products. 

Additionally, the high level of inflation has affected affordability of products.

Surveyed firms, however, reported improved performance in business activity in 2021 quarter three relative to 2021 second quarter, acknowledging that fourth quarter business activity was likely to mirror quarter three performance.

They expect an increase in business orders and sales, especially related to seasonal activity.

The prices of goods and services purchased is expected to remain elevated owing to cost of input pressures thereby limiting the scope for increased production volumes.

Optimism was mainly driven by the services sector due to improved business activity following the easing of Covid-19 restrictions, containment of the pandemic in view of increased vaccinations and improved prospects for global recovery, the survey says.

Business prospects are especially higher for firms in healthcare, security and manufacturers of medical supplies where activity has rebounded. 

Firms in professional services have also witnessed positive gradual growth and refreshed demand following the slowdown witnessed in 2020.  Businesses identified diversification and cost of optimisation as key ways to combat the risks.

Besides diversification as a top strategy across all sectors, sustainable business growth and cost optimisation were identified as top priorities by firms in the manufacturing sector. 

Agricultural sector

Improved efficiency and sustainable business growth were important priorities for the services sector while for the agricultural sector, top priorities included sustainable business growth and cost optimisation.

The objective of the Survey is to capture

information on top firms’ perceptions, expectations and decisions. The Survey supports key policy decisions, including monetary policy

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