The Kenya National Chamber of Commerce and Industry (KNCCI) has issued its latest Business Barometer Report shedding light on the precarious state of the country's business environment as we head into 2025. This fourth edition report surveyed nearly 2,000 businesses nationwide. It highlights a pause in growth plans and a cautious approach toward hiring amidst economic uncertainty.
A staggering 60% of businesses surveyed indicated they have no intention of expanding their workforce in the coming year. This hesitation carries troubling implications for Kenya's already strained labor market thus raising alarms over increasing unemployment levels. Experts caution that the stagnation in job creation could exacerbate issues of youth unemployment and underemployment, placing additional stress on household incomes.
Churchill Ogutu, an economist who analyzed the findings, pointed to the impact of ongoing economic challenges. "The shrinking disposable incomes that have faced businesses and individuals over the last couple of years have also trickled into the hiring projections. The fact that 65% of businesses are not prepared to expand their workforce reflects a broader concern for the economy," Ogutu explained.
Despite this cautious stance on hiring, a surprising 65% of businesses anticipate revenue growth in 2025. This optimism seems to stem from an expanding customer base and concerted marketing efforts rather than increased investments in personnel. Key sectors like retail, wholesale and mining, which constituted roughly 26% and 14% of the surveyed population respectively, demonstrated similar reluctance towards hiring amid perceived obstacles in the business landscape.
Sectors such as education (69%) and energy (67%) emerged as outliers, and this shows the greatest optimism for workforce expansion in the year. These contrasting figures suggest a diversification in growth potential across different industries, highlighting the disparities in how businesses are responding to changing economic conditions.
As the business landscape continues to shift, experts are emphasizing on the necessity for effective policy adjustments. Addressing pointers like the layers of taxation burden, regulatory inefficiencies and capital constraints will be crucial in unlocking the full potential of the private sector. This ensures that those optimistic projections translate into sustainable growth. The path ahead calls for strategic planning and collaboration between the public and private sectors.
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