CBK Survey Highlights Impact of Ruto’s Economic Policies on Business Confidence

Recent fiscal policies introduced by the Kenyan government have sparked varied reactions within the business community, with the latest Central Bank of Kenya (CBK) Market Perceptions Survey shedding light on the prevailing sentiments among key economic stakeholders. 

The survey, conducted in July 2024, provides a snapshot of business confidence across the nation, revealing a complex mix of optimism and concern within market players as businesses navigate the evolving fiscal landscape.

According to the survey, a significant portion of respondents expressed cautious optimism about the future, citing recent government initiatives aimed at stabilizing the economy.

Some business leaders have positively received the government’s focus on fiscal consolidation, including efforts to reduce public debt and streamline expenditure.

CBK Governor Kamau Thugge speaking at the Africa Climate Business Forum on November 2, 2023

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CBK

These measures are seen as crucial steps toward ensuring long-term economic stability, which in turn bolsters business confidence.

“By addressing the fiscal deficit and implementing prudent spending measures, the government is laying the groundwork for sustainable economic growth,” noted one respondent from the financial sector. 

“This gives businesses the confidence to plan for the future, knowing that the government is committed to maintaining economic stability.”

However, not all sectors share this optimism. The survey highlighted growing concerns over recent changes in taxation and regulatory policies, which some businesses view as potential barriers to growth. 

The introduction of new taxes and the adjustment of existing ones, particularly in sectors such as manufacturing and retail, have led to fears of increased operational costs and reduced profitability.

Moreover, the survey revealed that regulatory changes, especially those related to compliance and reporting requirements, are being met with apprehension. 

Businesses, particularly small and medium-sized enterprises (SMEs), fear that the increased administrative burden could stifle innovation and deter investment.

The mixed sentiments regarding fiscal policies are influencing investment decisions across the board. 

While some businesses are holding off on major investments until there is more clarity on the government’s fiscal strategy, others are taking a wait-and-see approach, carefully monitoring the impact of these policies on the broader economy.

Despite these concerns, the survey indicates that certain sectors, particularly those aligned with government priorities such as infrastructure development and green energy, continue to attract investment. 

These areas are seen as relatively insulated from fiscal uncertainties, offering growth opportunities even in a challenging economic climate.

The July 2024 Market Perceptions Survey underscores the delicate balance that the Kenyan government must maintain as it seeks to implement fiscal policies that support economic growth while addressing fiscal challenges.

A photo of the Central Bank of Kenya

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KO Associates