A significant portion of Kenyan businesses have revealed that they will freeze hiring during the remaining period of the fourth quarter of 2024 over escalating input costs that limit their ability to hire new staff.
A report compiled by the Kenya National Chamber of Commerce and Industry titled Kenya National Chamber of Commerce and Industry (KNCCI) Q4 Business Barometer Report and published on Tuesday October 14 revealed that 47 per cent project dimmer prospects, which has led them to arrive at this conclusion.
The report shows that most businesses surveyed cited factors such inflation, high taxation, and the sluggish macroeconomic environment have created significant barriers for growth, thereby rendering them unable to expand their operations.
A whooping 54 per cent of respondents told the KNCCI that they were not hopeful that there will be reduction in cost of primary inputs in the last quarter of the year.
Businesses across multiple sectors are finding it difficult to manage these rising costs, which are eroding profit margins and hindering their operational efficiency.
Inflation and Taxation
KNCCI revealed that inflation in Kenya continued to weigh down businesses as prices of basic commodities have soared progressively.
Moreover, taxation continued to be a major challenge for businesses — especially those involved in manufacturing as well as trade and commerce (retail/wholesale).
“Our operating costs are high, we can't take on more staff or reduce our prices” noted one respondent in the manufacturing space and located in Kisumu.
The report further suggested the sectors expected to be affected most by the hiring freeze include; Agriculture and the Digital Economy which the government has in the past touted as a major solution to Kenya’s high unemployment rates.
Nonetheless, businesses in the two sectors exuded confidence that there will be growth in terms of the revenue but they will be still cautious enough not to hire additional staff to cut on costs.
Businesses also cited global economic instability as another factor why there will be a need to apply caution.
KNCCI's report concluded policy reforms by the government will be required to stop the trend from spilling over to next year. The body stated that the reforms should focus on tackling inflation; trimming taxes and restoring supply chain stability.
