Kenyan business leaders are becoming more confident about the prospects of their own companies, even as concerns over the domestic economy and a deteriorating global outlook continue to weigh on sentiment.
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According to a Kenya Wall Street report citing the latest Central Bank of Kenya survey, 44.4 percent of CEOs expected their companies to grow faster than they did in 2025 in July, up from 38.9 percent in May. It marked the first improvement in company growth expectations after four consecutive surveys of declining confidence.
The more positive outlook was driven by stronger demand and orders, business expansion, market diversification, new products, improved efficiency and greater use of technology. However, the optimism was not broad based.
Only 24.6 percent of respondents expected Kenya’s economy to grow faster, slightly lower than the 25.3 percent recorded in May. Confidence in the global economy weakened further, with only 20.7 percent expecting stronger global growth, down from 22.6 percent.
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The survey suggests that companies are beginning to see better conditions for their own businesses even as the wider economy remains difficult.
“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,” the CBK said.
It added that growth remained constrained by “subdued demand, high operating costs, tax refund delays, financing constraints, raw material shortages, supply chain disruptions, and global uncertainty.”
Sales recover but costs remain a problem
Business activity improved in the second quarter after a weak start to the year.
About 34.4 percent of firms reported higher sales, while 33.6 percent reported lower sales. That was a marked improvement from the first quarter, when 41.8 percent of companies reported falling sales compared with 27.6 percent that recorded increases.
Demand followed a similar pattern. Some 34.7 percent of firms reported stronger demand in the second quarter, while 27.3 percent experienced a decline.
The improvement in sales, however, has not translated into stronger pricing power for many businesses.
Purchase prices increased for 63.6 percent of firms during the quarter, while only 38.5 percent increased their selling prices. This means many companies are absorbing part of the increase in their costs rather than passing it fully to customers.
The pressure was particularly severe in agriculture, where 80 percent of firms reported higher purchase prices but only 30 percent raised their selling prices.
Manufacturers were better able to pass on higher costs, with 66.7 percent reporting increased input prices and 55.6 percent increasing their own prices. In services, 61.3 percent of firms faced higher purchase costs, while only 37.1 percent raised selling prices.
Agriculture and manufacturing also recorded the strongest sales performance. Sales increased for 50 percent of agricultural firms and 55.6 percent of manufacturers, compared with 29.9 percent of companies in the services sector.
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Businesses turn back to banks
The survey also points to growing reliance on bank financing as companies seek funds to support their operations.
Bank loans accounted for 33.7 percent of firms’ financing in July, up from 24.1 percent in May.
The increase could reflect higher working capital needs as business activity improves, while some companies may also have less internal cash available after a difficult start to the year.
Access to credit, however, remains a challenge. Only 21.6 percent of respondents described bank credit as easy or very easy. More than half, or 57.8 percent, considered access moderate, while 20.6 percent said it was difficult or very difficult.
At the same time, 45.9 percent of respondents said lending rates had fallen since August 2024, including 9.8 percent who reported reductions of more than two percentage points. Another 42.6 percent said rates had remained unchanged, while 11.4 percent reported increases.
The figures show that lower borrowing costs do not automatically translate into easy access to credit, particularly for businesses that remain constrained by weak demand, high operating costs and tighter lending conditions.
Energy and taxes remain major concerns
The cost of doing business was the biggest domestic constraint identified by companies, accounting for 19 percent of responses. Increased taxation followed at 17 percent, while reduced consumer demand accounted for 12 percent.
Political uncertainty and the wider economic environment each represented 11 percent.
External risks were even more pronounced. About three quarters of respondents were extremely or very concerned about energy prices, making energy costs the biggest external threat facing businesses.
Geopolitical tensions followed at 64 percent, while macroeconomic volatility and cyber risks were cited by 55 percent and 48 percent respectively.
The impact of global shocks on Kenyan businesses appears to be easing in some areas. The share of companies reporting a high impact from the Middle East conflict fell to 56.5 percent from 67.1 percent.
Concern over US tariffs also declined, with the proportion reporting a high impact falling to 33 percent from 36.3 percent. At the same time, the share reporting no impact from US tariffs increased to 21.6 percent from 13.2 percent.
The survey presents a mixed picture of Kenya’s business environment. Companies are seeing stronger demand and improving sales, but high costs, limited access to finance, taxes and global uncertainty continue to restrict their ability to turn that recovery into stronger profitability.
For policymakers, the challenge will be to ensure that improving business activity is supported by lower financing barriers and a more predictable operating environment, allowing the renewed confidence among CEOs to translate into investment, hiring and broader economic growth.
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