The Kenya shilling (KES) lost 21% of its value between September 13 2022 and November 22 2023, Kenyan employers say.
In a recent statement, the Federation of Kenyan Employers (FKE) noted that the exchange rate of the Kenya shilling against the USD had hit a high of 152.45 compared to 121.05 at the same time in 2022. This has been largely attributed to capital flight and reduced inflow of foreign currency due to the low value of exports.
According to the body, the country is experiencing a high outflow of investors due to continued negative investor sentiment on emerging and frontier markets, the high cost of doing business as well as depreciating Kenyan shilling against major world currencies.
Kenya’s stock market recently suffered steep losses, making it the worst-performing globally. The weak performance has persisted. Market capitalization has declined by 5.1 percent, while equity turnover and total shares traded declined by 67.9 percent and 29.6 percent respectively.
Credit risk remains elevated with Gross Non-Performing Loans (NPLs) to Gross Loans Ratio standing at 15 percent at the end of the third quarter of 2023, an increase from 13.3 percent recorded at the beginning of 2023.
Moreover, the country’s workforce is becoming uncompetitive relative to other East African economies.
“Kenya’s productivity is not only low, (but) it is also decreasing while in Tanzania and Uganda, labour productivity grew by 8.4 per cent and 13 per cent respectively, and that of Kenya stands at 6.77 %,” FKE said.
“We cannot effectively compete with this level and type of productivity.”
According to an upcoming survey by the FKE, between October 2022 and November 2023, the country has lost 3% (70,000) of the jobs in the formal private sector and 40% of employers have reported that they are planning to reduce the number of employees to meet the increasing costs of operating in Kenya.
“It is becoming more expensive to operate in Kenya due to the frequent and unplanned introduction of taxes, fees, levies, and charges.If private sector growth fails to happen, then economic development shall remain stunted because of the numerous taxes they have to pay,” the employers in Kenya said.
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