The Central Bank of Kenya (CBK) introduced a Chief Executive Officers’ (CEOs) Survey in March 2021, with the objective of capturing information on top firms’ perceptions, expectations and decisions and supporting key policy decisions, including monetary policy. The Survey sought CEOs views on selected indicators including business confidence/optimism, previous quarter business activity, and outlook for business activity in the near term. The survey also sought to establish the key internal and external factors that could influence the business outlook, and strategic priorities over the medium-term.
The key takeaways from the Survey include:
- A majority of CEOs were optimistic about higher growth prospects for their companies and sectors in the next 12 months. This optimism was mainly due to the rollout of the COVID-19 vaccines and the continued reopening of the economy which signals gradual recovery. The higher company and sector growth prospects were strongest in the services sector which experienced slowdown in business activity during the pandemic.
- Business leaders indicated a recovery in business activity in 2021 Q1 relative to 2020 Q4 mainly reflected by increased demand/orders and production volumes. Demand, production volume and sales growth were higher especially for the agriculture and service sector firms, the latter having experienced the largest contraction in output in 2020 Q2 and Q3.
- Most CEOs expected an increase in business activity in 2021 Q2, particularly with regard to demand/orders, production volumes and growth in sales of goods and services.
- The economic environment, COVID-19 pandemic and the business environment were highlighted by CEOs as significant factors that could constrain growth/expansion of businesses over the next year. The business leaders indicated that internal cost containment, improved efficiency and innovation and skills retention were key internal factors that could strengthen their outlook. Externally, respondents indicated that an improved regulatory environment/tax regime, a stable economic environment and easing of the cost of doing business could strengthen the outlook of their firms over the same period.
- The main concerns for CEOs were a challenging business environment, economic performance and the effects of the COVID-19 pandemic. Business leaders indicated that they would leverage on their firms’ top strengths, which they identified as technical capability/skilled workforce, a strong brand, and effective supply chains, to manage costs/risks, lobby with government and digitize/ innovate to address their most urgent concerns.
- In terms of strategic direction over the next three years, business leaders plan to expand into new markets, improve brand/value proposition of their current products and develop new products through horizontal diversification and vertical value addition.
Read the full report here…