NAIROBI, Kenya, Sep 11 – Local business leaders remain fairly confident about the economy, despite the forthcoming general elections, according to a new survey released on Tuesday.
The Business Leaders Confidence Index (BLCI) released by the Kenya Private Sector Alliance (KEPSA) and Ipsos Synovate revealed that 53.8 percent of top entrepreneurs in Kenya were optimistic, although this outlook was subdued compared to their sentiments ahead of the 2007 elections when 68 percent were upbeat about the business climate.
It also showed that 49.1 percent of business leaders were generally optimistic about the economy in the next six months.
When compared to their regional counterparts however, business leaders in Kenya were the least confident about future economic prospects, with Uganda at 65.8 percent and Zambia at 65.4 percent.
Ipsos Synovate Managing Director Maggie Ireri said the financial segment was more upbeat about economic prospects with 65.9 percent expecting the economy to perform better over the next six months, whereas the building and construction sector was expecting tougher times ahead.
“Building and construction was the lowest in the Index. This could be attributed to the fact that the loans given by the banks over the last few months have been quite expensive because of the high interest rates and even though they’re going down the building sector has not seen the effect in the short term,” she said.
High energy costs, access to and cost of credit, insecurity and high taxes topped the list of challenges facing businesses in Kenya, however KEPSA Chairman Patrick Obath says concern over poor infrastructure is not featuring as prominently as it did a few years ago, reflecting the improvements in the road and fibre-optic networks made by the government.
“The challenges to competitiveness will always have energy and will continue for some time despite striking gas off the coast of Malindi. By the time that hits Kenya it will be five years from now. Energy such as diesel and electricity are the ones that really hit industry,” he said.
Ipsos Synovate polled 145 business leaders from small, medium and large enterprises across 13 sectors between July and August this year.
As far as political landscape favourability, 78 percent of business leaders said that Kenya is moderately or very attractive for foreign investors compared to 22 percent who felt it wasn’t attractive at all.
However, Obath warned that the skirmishes in Tana River that have claimed over a hundred lives in the last three weeks, should be nipped in the bud.
“Tana River is a wakeup call for the country and we need to manage what is likely to happen in other counties very quickly by being proactive,” he said.
Violence tends to spark in the country ahead of the general elections often seeing investors adopt a “wait and see” attitude until tensions subside, which Obath said should be the case after the March elections and lead to an uptick in confidence levels.