Economy: Kenyan businesses worried about elections and war in Ukraine

Kenya’s Ministry of Finance presented a $28 billion budget this week. The aim is to revive an economy hit by the loss of hundreds of thousands of jobs due to the Covid-19 pandemic. The Central Bank of Kenya has released its survey on business apprehension about the country’s economic outlook, their confidence in growth, their expectations and fears for the next quarter and more generally for the year 2022. The survey is representative of Kenya’s most important economic sectors such as industry, trade, energy and mining, agriculture and tourism. While companies are generally optimistic and welcome the post-pandemic recovery, they are concerned about the upcoming elections and the war in Ukraine.
“Increased political uncertainty is a greater concern for businesses,” the Kenyan central bank report notes. Businesses fear that “investors will adopt a wait-and-see attitude” in the run-up to the polls in early August. Fears that particularly affect the services and industrial sectors. The 2017 presidential election crisis had a significant impact on economic operators
Another concern is the war in Ukraine. It “poses a substantial threat to growth,” the Kenyan central bank report notes. “This is leading to higher inflationary pressures” and could erode gains from the ongoing post-Covid-19 recovery.
The pandemic and the Russian-Ukrainian conflict are contributing to the continuing disruption of global supply chains, economic players say. The agricultural sector is particularly affected. Operating and cargo costs are also mentioned. Other factors mentioned were rising commodity prices, inflation and the stability of the Kenyan shilling.
Among the favorable points, the actors surveyed highlight the reduction in electricity prices by the authorities, they would like to see efforts made to improve infrastructure, and anticipate favorable weather conditions for the agricultural sector.