Kenyan manufacturers and employers are warning of more job cuts by January 2024 as the government ratchets up taxation measures and interest rates, amid dwindling business and investment.
The Kenya Association of Manufacturers (Kam) and the Federation of Kenya Employers (FKE) have commissioned a survey on the impact of fiscal measures in the Finance Act, 2023 on jobs, noting that most businesses have indicated they will be desire announcing employee redundancies.
While announcing the commencement of a survey, Kam CEO Anthony Mwangi said the study is expected to gauge the impact of the high cost of living.
The results of the two surveys are expected before December 30.
The Monetary Policy Committee (MPC) meeting on December 5, 2023 noted persistent domestic inflationary pressures and a depreciating shilling, and that “manufacturers are of the view that high tax regime, climate change, global effect have slowed down economic growth.”
This has resulted in a decline in exports by two percent in the 12 months to October 2023, compared with a similar period in 2022.
“Imports declined by 14.9 percent in the 12 months to October 2023, compared to a growth of 14.7 percent in a similar period in 2022, mainly reflecting lower imports across all categories except food,” said Dr Kamau Thugge, the Central Bank of Kenya governor.
Among the sectors impacted are manufacturing, transport, textile and apparel, food, and tourism. But tourist arrivals improved by 34.1 percent, compared to a similar period in 2022.
“The hotel industry is faring well in terms of occupancy. However, the cost of doing business has greatly increased as the industry tries to cushion the extra expenses,” said Michael Macharia, CEO of Kenya Association of Hotel Keepers and Caterers.
“We did comment on the Finance Act and indicated that it would push the cost to the employer. We had requested for some elements to be commenced in Jan 2024 in order to allow for proper budgeting and also inform the clients.”
Among organisations that have declared a number of workers redundant are Both Aston and Mombasa Apparel, who plan to send home over 7,850 employees by December 23.
Postal Corporation of Kenya, Posta, plans to lay off 504 workers in February 2024, seeking to reduce its monthly payroll from Ksh122 million ($795,306) to Ksh70 million ($456,323). At least 870 jobs are at risk as Kwale-based Base Titanium as it announced it will exit Kenya in 2024.
Labour Principal Secretary Shadrack Mwadime, who appeared before the National Assembly Committee on Labour on November 27, said that Ashton Apparel and Mombasa Apparel are to be transferred to a company named Gokaldas Exports Ltd.
Postal Corporation of Kenya, Posta, plans to lay off 504 employees in February 2024, seeking to reduce its monthly payroll from Ksh122 million ($795,306) to Ksh70 million ($456,323) as it struggles to stay afloat.
At least 870 jobs are at risk after Kwale-based Base Titanium announced it will exit the Kenyan market in 2024; while British printing company De La Rue, e-commerce startup Copia, and agri-tech firm Twiga Foods have all drawn redundancy lists.
Dr Thugge said that the CEOs Survey and Market Perceptions Survey which were conducted ahead of the MPC meeting revealed tempered optimism about business activity for the next 12 months.
“Respondents expressed concerns about weakened consumer demand, and increased costs of doing business attributed to the weakening of the Kenya shilling, taxation, and higher energy costs,” said Dr Thugge.
The survey showed that 26.3 percent of Kenyan CEOs plan to cut jobs before January 2024.
CBK interviewed more than 1,000 CEOs in quarter three of 2023 and, of those surveyed, 26.3 percent plan to reduce their workforce, while 63.5 percent will not recruit new employees.
The Nairobi Securities Exchange (NSE) lost 6,256 investors who sold shares worth Ksh18.7 billion ($167 million) from January to October as they left the market.