Kenya’s CEOs regained some faith in the prospects of their businesses in July, ending the four-survey decline in company growth expectations but confidence in the local economy remained weak and expectations for the global economy deteriorated further, according to the latest Central Bank of Kenya (CBK) survey.
- •About 44.4% of respondents expected their companies to record higher growth than in 2025, up from 38.9% in May.
- •However, only 24.6% expected higher growth for the Kenyan economy, slightly down from 25.3% in May, while the share expecting stronger global growth fell to 20.7% in July from 22.6%.
- •Meanwhile, business activity improved in the second quarter after a weak start to the year but the recovery has yet to give companies much more power over their costs or prices.
“Company level growth prospects improved, supported by higher demand and orders, business expansion and market diversification, new product development, operational efficiency, government support, favourable weather conditions, and adoption of technology and innovation. However, growth continues to be constrained by subdued demand, high operating costs, tax refund delays, financing constraints, raw-material shortages, supply-chain disruptions, and global uncertainty,” the CBK survey states.
In the second quarter, 34.4% of firms reported higher sales and 33.6% reported lower sales, a near reversal of the first quarter, when the previous survey found 41.8% had reported falling sales against 27.6% reporting increases. Demand showed a similar shift, with 34.7% of firms reporting an increase and 27.3% a decline.
However, purchase prices rose for 63.6% of firms in the second quarter, while only 38.5% raised their selling prices. The imbalance was much the same in the first quarter, when the earlier survey found 68% of firms reported higher purchase prices compared with 41.4% reporting higher selling prices.
For businesses, that gap matters more than a quarter of improved sales might suggest. Revenue can recover while profitability remains under pressure if input costs rise faster than prices charged to customers.
The margin squeeze was not evenly distributed across the economy. Agriculture reported the sharpest cost pressure, with 80% of firms citing higher purchase prices in the second quarter against just 30% able to raise selling prices in turn. Manufacturing managed the pass-through better, with 66.7% reporting higher input costs and 55.6% raising prices. Services fell in between, with 61.3% reporting higher purchase prices and 37.1% higher selling prices.
Manufacturing and agriculture also posted the strongest demand and sales gains of the quarter, with sales rising for 55.6% of manufacturers and 50% of agricultural firms, compared with 29.9% of services firms.
Bank Loans are still hard to get…
On the other hand, bank loans accounted for 33.7% of firms’ financing in July, up sharply from 24.1% in May. The July jump suggests that businesses are once again leaning more heavily on banks, either because improving activity is creating greater working-capital needs or because companies that had relied on internal cash during the weaker period have less of it available now.
About 45.9% of respondents said bank lending rates had fallen since August 2024, including 9.8% who reported declines of more than two percentage points. Another 42.6% said rates were unchanged, while 11.4% reported increases. Additionally, only 21.6% of respondents rated access to bank credit as either easy or very easy, while 57.8% called it moderate and 20.6% described it as difficult or very difficult.
The survey points to a familiar problem in monetary policy where lowering the price of money at the policy level does not necessarily mean businesses receive cheaper credit at the same speed or magnitude.
The Pressures From Within and Outside…
The cost of doing business was the most frequently cited domestic constraint, at 19%, followed by increased taxation at 17% and reduced consumer demand at 12%. Political uncertainty and the broader economic environment each accounted for 11%.
Energy costs were an even larger concern when firms were asked about external threats. Three-quarters of respondents were either extremely or very concerned about energy prices. Geopolitical tensions ranked second at 64%, followed by macroeconomic volatility at 55%, and cyber risks at 48%.
However, the share of respondents describing the Middle East situation as having a high impact on their operations fell to 56.5% from 67.1%, while the comparable figure for US tariffs slipped to 33% from 36.3%. The proportion reporting no impact from US tariffs rose to 21.6% from 13.2%.
