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| FKE Executive Director and CEO Jacqueline Mugo |
According to the Federation of Kenya Employers (FKE), between October 2022 and November 2023, the officially recognised private sector in the nation lost an astounding 70,000 jobs.
This is happening despite the fact that 40% of companies in the industry are still considering downsizing to deal with the sharp increase in operating expenses in the nation, according to FKE.
In a message to newsrooms on Friday, the federation—signed by Executive Director Jacqueline Mugo and National President Habil Olaka—noted that the nation’s employment situation is still precarious since it hasn’t found a path to recovery after the COVID-19 pandemic’s effects.
The group says that the recent legislation and implementation of the Finance Act, 2023, by the government, which brought several levies with it, has made the cost of doing business in Kenya unsustainable.
The FKE, caught between a collapsing shilling and a collapsing economy, has now sharply criticised government measures, pointing out their detrimental impact on companies that depend on imports.
The value of the Kenyan shilling fell by 21% between September 13, 2022, and November 22, 2023, indicating a steep decrease.
The statement said, “The exchange rate versus the US dollar has surged to 152.45, a notable increase from the 121.05 recorded during the same time in 2022.
Capital flight and a decrease in foreign exchange inflow, worsened by the poor value of exports, are attributed by FKE as the causes of this depreciation.
The employers’ association also points out that the high cost of capital in Kenya continues to be a significant barrier for the private sector.
In light of many variables like inflation, market dynamics, governmental policies, and interest rates, FKE notes that on June 26, 2023, the Central Bank of Kenya (CBK) increased its benchmark rate by 100 basis points to 10.5%, marking the highest level since August 2016.
As a result, borrowing rates have increased dramatically, making credit unavailable to firms and impeding development in general.
The federation goes on to criticise the present status of the economy, claiming that it is plagued by an alarming rate of inflation.
In October 2023, the Consumer Price Index (CPI) indicated that the annual inflation rate had increased to 6.9%.
The Gross Non-Performing Loans (NPLs) to Gross Loans Ratio was at 15% at the end of the third quarter of 2023, a considerable rise from the 13.3% recorded at the beginning of the year, indicating that credit risk is present at the same time.