Kenyan business leaders are increasingly optimistic about the country’s economic prospects in 2025, despite persistent concerns over taxation, business costs, and subdued consumer demand, a new survey has revealed.
Kenyan economic outlook 2025 according to the Central Bank of Kenya’s (CBK) January 2025 CEO Survey, which gathered insights from more than 1,000 company executives across various sectors, shows a marked improvement in business confidence. Many respondents cited favourable weather conditions, macroeconomic stability, and declining interest rates as key factors expected to drive growth over the next 12 months.
The respondents were from the following sectors: manufacturing (16 percent), agriculture (13 percent), tourism, hotels, and restaurants (13 percent), financial services (13 percent), professional services (12 percent), ICT and telecommunications (7 percent), transport and storage (6 percent), healthcare and pharmaceuticals (6 percent), wholesale and retail trade (5 percent), education (5 percent), and mining and energy (2 percent).
Other sectors not specified accounted for two percent of the respondents while sectors such as real estate, media, building and construction, and security accounted for one percent each or less. The survey highlights a positive shift in expectations for economic growth at the company’s sectoral, and national levels. A significant proportion of CEOs believe the Kenyan economy will expand in 2025, driven by increased production, market diversification, and strategic investments.
The financial services, agriculture, and manufacturing sectors are particularly poised for expansion. Agriculture is expected to benefit from improved weather and growing demand for exports, particularly in the European Union. Meanwhile, manufacturing could experience a resurgence due to stable energy prices and a more favourable exchange rate environment.
Despite the optimism, the Kenyan economic outlook 2025 underscores significant hurdles that businesses must overcome. Taxation and the high cost of doing business remain the most cited concerns, followed by liquidity constraints and weak consumer demand.
Sector-specific challenges also persist. The tourism industry, for instance, faces pressures from multiple levies and increased park fees, which have made Kenya a pricier destination compared to regional competitors. Similarly, healthcare providers are grappling with uncertainty around donor funding and transitional issues related to the new Social Health Insurance Fund.
CEOs are taking proactive steps to navigate the evolving business landscape. The report identifies several strategic priorities for firms. Companies are increasingly focusing on market and product diversification to navigate economic uncertainties, expanding into new regions and broadening their offerings to mitigate risks.
A strong emphasis on customer-centric innovations, driven by technological advancements, is expected to enhance competitiveness and brand loyalty. Additionally, businesses are actively pursuing strategic partnerships, mergers, and acquisitions to bolster their market positions and drive growth.
At the same time, operational efficiency remains a key priority, with organizations implementing cost-cutting measures and process optimizations to counter rising expenses and sustain profitability. Employment and Investment Outlook
While economic conditions are expected to improve, employment levels are likely to remain largely unchanged in the near term. The survey suggests that firms are focusing on productivity enhancements rather than workforce expansion.
Investment, however, is projected to increase, with many firms looking to capitalize on declining interest rates to secure credit for expansion initiatives. Improved access to financing is expected to facilitate business growth and innovation.
On a global scale, CEOs express cautious optimism. Lower inflation and interest rates in major economies are seen as beneficial for international trade. However, concerns about geopolitical tensions and potential tariff changes remain.
The ICT sector, particularly fintech, continues to attract investment, with businesses leveraging technology to enhance financial inclusion and service delivery. Meanwhile, the education sector is witnessing increased demand for digital learning solutions, reinforcing the broader trend of technology-driven growth.
The report concludes with key recommendations designed to foster a more conducive business environment. It emphasizes the need to reduce regulatory uncertainties, particularly in taxation, to create a stable and predictable investment climate.
Additionally, it calls for policies that lower the cost of doing business, such as streamlining import and export procedures to improve efficiency. Enhancing access to credit is another priority, with suggestions to address liquidity constraints in the financial sector to support business growth. Furthermore, the report highlights the importance of strengthening infrastructure to bolster key industries like agriculture and manufacturing, ensuring long-term economic resilience.
Majority of the respondents (63 percent) were privately-owned domestic firms, while the rest were privately-owned foreign businesses (15 percent), government owned entities (5 percent), publicly listed foreign companies (4 percent), publicly listed domestic companies (4 percent) and other ownership structure (9 percent).
Fifty-two percent of the respondents had a turnover of over Ksh 1 billion in 2024, sixteen percent of the respondents had a turnover of between Ksh 250 million and 1 billion, and twenty nine percent of the respondents had a turnover of less than Ksh 250 million during the same period.
In terms of employment, 37 percent of respondents employed less than 100 employees, 45 percent of the respondents had between 100 and 1000 employees, and 17 percent of respondents employed over 1000 people. The responses were aggregated and analysed using frequencies, percentages, and simple averages where appropriate.
As Kenya moves into 2025, the Kenyan economic outlook 2025 results indicate that while challenges persist, business leaders remain largely hopeful about the economic outlook. With targeted interventions, supportive policies, and strategic business adaptations, the country could be on track for sustained economic growth.
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