The Federation of Kenya Employers (FKE) recently disclosed a disheartening revelation that Kenya faced a substantial loss of 70,000 jobs in the formal private sector from October 2022 to November 2023.
In a statement released by FKE National President Habil Olaka and Executive Director Jacqueline Mugo, it was emphasized that a staggering 40% of employers in the sector are contemplating downsizing to navigate the significant surge in operational costs within the country.
FKE expressed concern that the state of employment in Kenya remains fragile, struggling to recover from the aftermath of the COVID-19 pandemic.
Compounding this challenge, the organization criticized government policies, particularly the recent Finance Act, of 2023, which introduced numerous taxes and rendered the cost of doing business in Kenya unsustainable.
The Federation pinpointed the decline of the Kenyan shilling, losing 21% of its value between September 13, 2022, and November 22, 2023, reaching an exchange rate of 152.45 against the USD.
This depreciation was attributed to capital flight and reduced foreign currency inflow, aggravated by low export values.
FKE underscored the prohibitively high cost of capital in Kenya as a major hurdle for the private sector.
The Central Bank of Kenya (CBK) raised its benchmark rate by 100 basis points to 10.5% on June 26, 2023, the highest since August 2016.
Consequently, borrowing costs surged, making credit inaccessible for businesses and impeding overall growth.
The federation lamented the current economic landscape, citing a concerning inflation rate of 6.9% in October 2023, measured by the Consumer Price Index (CPI).
Additionally, the Gross Non-Performing Loans (NPLs) to Gross Loans Ratio stood at 15% at the end of the third quarter of 2023, a notable increase from the 13.3% recorded at the beginning of the year.
These factors collectively contribute to the challenging environment faced by businesses in Kenya.
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