Kenyan businesses remain cautiously optimistic about their growth prospects over the next 12 months despite rising operating costs, geopolitical tensions and uncertainty in the global economy, according to the Central Bank of Kenya (CBK) July 2026 CEOs Survey.
The survey, conducted between July 13 and 24, 2026, gathered views from chief executive officers on business confidence, economic prospects, financing, technology adoption, geopolitical risks and strategies for growth. The CBK conducts the CEOs Survey every two months ahead of Monetary Policy Committee meetings to capture private-sector perceptions of the business environment.
The findings point to a private sector facing significant cost pressures but continuing to identify expansion opportunities.
Businesses remain optimistic about growth
Despite heightened global risks, CEOs remained positive about Kenya’s growth prospects over the next 12 months.
Company-level growth prospects improved, supported by higher demand and orders, business expansion, market diversification, new product development, operational efficiency, government support, favourable weather and adoption of technology and innovation.
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However, subdued demand, high operating costs, delayed tax refunds, financing constraints, raw-material shortages, supply-chain disruptions and global uncertainty remain major obstacles.
Most respondents expect sectoral growth to strengthen over the next year. Agriculture is expected to benefit from favourable weather, government support and export demand, while manufacturing could gain from stronger external demand and new markets. Financial services are expected to benefit from stable demand, fintech expansion, improved customer experience and new products.
Q2 business activity was mixed
Business activity in the second quarter of 2026 was mixed compared with the first quarter. CEOs reported stronger demand and orders, production volumes and sales as activity recovered from the post-festive-season slowdown.
The improvement was supported by better access to credit at lower lending rates, favourable rainfall, improved marketing, stronger demand in tourism, healthcare and construction, and increased government spending on infrastructure.
Nevertheless, higher fuel, energy and input costs, supply-chain disruptions and weaker consumer purchasing power continued to constrain businesses and put pressure on margins. Purchase prices generally increased while selling prices remained broadly stable in several sectors, limiting firms’ ability to pass higher costs to consumers. Employment remained largely unchanged.
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Q3 outlook is broadly stable
CEOs expect business activity in the third quarter of 2026 to remain broadly stable, although many firms anticipate improvement compared with the May survey.
Expected drivers include higher demand, sales growth, increased production, peak tourism activity, agricultural harvests, production seasons, stronger marketing, business expansion and increased activity following government budget releases.
At the same time, high production and operating costs, weak consumer purchasing power, geopolitical tensions, commodity-price uncertainty and the high cost of living remain concerns.
Purchase prices are expected to remain elevated because of fuel, energy and raw-material costs. Although supply conditions are improving, companies have limited ability to increase selling prices because consumers remain price-sensitive. This could continue squeezing profit margins.
Most firms have spare capacity
A significant proportion of firms are operating below or near full capacity, meaning they could accommodate unexpected increases in demand.
Businesses cited idle capacity, additional work shifts, process optimisation, improved systems, available inventory and supplies, access to casual labour and better planning as factors that could enable them to scale production.
However, firms operating at or near capacity could face difficulties because of high costs, raw-material shortages, delivery delays, limited liquidity, expensive financing and shortages of specialised labour.
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Geopolitical tensions remain a major risk
Geopolitical developments continue to pose risks to Kenyan businesses. CEOs expect trade tensions and policy changes to increase supply-chain pressures, import and shipping costs and production expenses.
They also identified potential effects on tourism, donor funding, foreign aid and consumer purchasing power. Conversely, de-escalation of tensions in the Middle East could reduce energy and freight costs and ease trade and supply-chain pressures.
71% of firms have adopted technology
Technology adoption has become a major component of business strategy. The survey found that 71 per cent of respondents had integrated automation, digitisation or technology into their operations, compared with 29 per cent that had not.
Firms are using automation, digital payments, cloud solutions, AI-enabled systems and integration with e-TIMS and other regulatory platforms to improve efficiency, customer service and cost management.
However, adoption is constrained by implementation and maintenance costs, skills gaps, integration challenges, rapid technological change, cybersecurity and data-privacy risks, network disruptions and uncertainty about returns on technology investment.
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Access to credit is improving
The majority of respondents reported moderate access to bank credit. Improved access was attributed to lower lending rates, digital loan processing, stronger bank-customer relationships and improved banking efficiency.
Specifically, 57.8 per cent described access to credit as moderate, while 15.7 per cent considered it easy and 5.9 per cent very easy. Meanwhile, 11.8 per cent described access as difficult and 8.8 per cent as very difficult.
Interest rates have also declined for some firms. Forty-six per cent of respondents reported lower bank-loan interest rates since August 2024, although some businesses said commercial lending rates remained sticky despite monetary policy easing.
The cost of doing business is the biggest challenge
The cost of doing business remains the leading domestic constraint on growth. Other challenges include increased taxation, regulatory issues, government policies, weak consumer demand, political uncertainty and supply-chain disruptions.
Externally, energy prices, geopolitical tensions and global macroeconomic volatility are among the principal threats because they can increase operating costs, disrupt supply chains, weaken demand and create inflationary pressures.
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Efficiency is becoming the priority
CEOs identified technological innovation, digitisation and automation as the leading drivers of firm growth, followed by customer centricity and improved operational efficiency.
Over the next three years, improved efficiency was the top strategic priority at 28 per cent, followed by sustainable business growth at 20 per cent, cost optimisation at 15 per cent, diversification at 14 percent and digital transformation at 7 per cent.
Businesses intend to respond to constraints primarily through managing costs and risks, adopting technology and innovation, and diversifying into new markets and products.
What businesses want from government
CEOs called for measures to reduce the cost of doing business, including lower levies, licensing and compliance costs, as well as reduced fuel, energy and input costs.
They also want greater tax and regulatory predictability, affordable financing for SMEs, reduced bureaucracy, timely settlement of pending government bills, stronger fiscal management, improved infrastructure and sustained public-private sector dialogue.
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Bottom line
The CBK July 2026 CEOs Survey portrays a private sector that remains optimistic but under pressure. Kenyan businesses see growth opportunities, yet high operating costs, weak purchasing power, geopolitical risks and global uncertainty continue to threaten margins.
The response from companies is increasingly centred on productivity: technology adoption, automation, efficiency, customer focus, diversification and better cost management.
For policymakers, the survey reinforces the importance of lowering the cost of doing business and creating a predictable regulatory and financing environment. For business leaders, it highlights a different imperative: growth must increasingly come from becoming more efficient, innovative and resilient.
Kenya’s ability to translate private-sector optimism into sustained investment, employment and economic growth will depend on how effectively businesses and policymakers address these constraints together.
