Kenya’s economic outlook for the next 12 months has significantly improved, buoyed by continued macroeconomic stability, falling bank lending rates, favourable weather conditions, and sector-specific growth opportunities.  

This is according to the latest Business Confidence Survey, which polled corporate executives and CEOs across key sectors of the economy.

“Majority of respondents reported higher growth prospects for companies, supported by strategic actions to improve performance,” the survey conducted by the Central Bank of Kenya noted.  

The report shows renewed optimism among businesses regarding Kenya’s economic performance, with most firms citing stable inflation, a resilient Kenyan shilling, and improved liquidity as central drivers of growth.

A notable finding from the May 2025 survey is the marginal but visible decline in bank lending rates. Compared to March 2025, more firms reported access to cheaper credit, even though the pace of the decline was slow.  

This trend is expected to ease liquidity constraints and encourage expansion and hiring, particularly in capital-intensive sectors like agriculture, manufacturing, and ICT.

“Easier access to credit will empower us to finance growth initiatives that had been put on hold,” said a financial sector CEO.

Pending government bills

However, concerns linger over the elevated cost of doing business, pending government bills, and tax burdens.

The upcoming 2025/26 financial year is expected to introduce new levies, which could suppress consumer demand and reduce margins across several industries.

Sectoral growth prospects have improved overall, though some sectors continue to report operational and structural headwinds.

Firms anticipate strong performance thanks to ongoing long rains and new export markets.

Nonetheless, high input costs and limited access to financing remain key obstacles, particularly as financial institutions continue to view the sector as high-risk.

The sector is optimistic, driven by digital transformation, product diversification, and falling interest rates. Still, the rise in non-performing loans is seen as a growing concern that could erode profitability if left unchecked.

Recovery in both foreign and domestic tourism is boosting outlooks. Increased investment in infrastructure and international marketing efforts are showing returns.

However, some players noted a decline in conference bookings, largely tied to cuts in NGO and donor-funded programs following policy shifts by the new US administration.

These sectors are banking on strategic partnerships, digitisation, and tailored customer solutions to sustain growth.

“We are expanding through technology alliances that improve both performance and market reach,” one ICT executive commented.

These sectors continue to face pressure from liquidity issues, high operating costs, and weak consumer demand.  

For healthcare providers, delayed government payments and dwindling donor funds are major constraints.

Meanwhile, wholesale and retail traders cited low purchasing power as a limiting factor for demand recovery.

On the global front, expectations for growth over the next year have also improved, bolstered by falling inflation and monetary policy easing in developed markets.  

However, business leaders remain wary of global trade disruptions, regional conflicts, and shifting US foreign and economic policies.

“While global economic conditions are more favourable than last year, we’re watching geopolitical risks closely. Any major disruption could impact trade and supply chains,” a respondent in the logistics sector noted.

Despite prevailing risks, Kenyan firms appear more confident in their own resilience and strategic direction. Many are investing in innovation, automation, and improved customer experiences to drive growth.

Companies are also entering strategic partnerships to gain a competitive advantage and weather market volatility.

The report concludes that while challenges persist — from taxation and donor funding cuts to global uncertainty — Kenya’s private sector remains cautiously optimistic.

With supportive policies and stable macroeconomic conditions, the next 12 months could mark a stronger rebound for the Kenyan economy.

Boost business prospects

Industry players, however, recommended several measures to further boost business prospects, such as the implementation of business-friendly policies that support sustained growth.  

They vouched for the creation of forums for engagement with players in the various sectors of the economy and reducing political tensions and ensuring stability, ahead of the general elections, alongside tackling the non-tariff trade barriers in East Africa and Africa at large to promote regional trade.

This Survey was conducted between May 12-23, 2025. The Survey inquired from CEOs about their levels of confidence/optimism in the growth prospects for their companies and sectors, as well as the growth prospects for the Kenyan and global economies over the next 12 months.  

In addition, the Survey interrogated CEOs on business activity in the 2025 quarter two compared to the 2025 quarter one, and their expectations for economic activity in the third quarter of 2025.