Kenya’s private sector is under siege from rising operational costs, erratic policy changes, and eroding investor confidence, the Federation of Kenya Employers (FKE) warned during its 66th Annual General Meeting.
FKE painted a grim picture of the country’s business climate, warning that Kenya is losing its competitive edge to neighbours like Rwanda, Uganda, and Tanzania — a shift that was unthinkable just a few years ago.
“The 2024 World Citizenship Report ranked Rwanda, Uganda, and Tanzania as more attractive destinations for high-net-worth individuals than Kenya. That is unprecedented,” said FKE President Dr. Gilda Odera.
Crisis Brewing: High Costs, Shrinking Jobs
At the heart of the problem is a surge in statutory deductions — including the Housing Levy and Social Health Insurance Fund (SHIF)—which FKE says are pushing businesses to the brink. Coupled with frequent regulatory changes, companies are struggling to stay afloat, forcing layoffs and curbing expansion plans.
“These pressures are weakening enterprise resilience,” Dr. Odera noted.
In 2024, only 75,500 formal jobs were created, a sharp drop from 123,000 the previous year. That’s against an annual influx of 800,000 to 1.2 million new job seekers, creating a dangerous mismatch.
“We are educating our youth for a lifetime of unemployment unless something changes,” said FKE CEO Jacqueline Mugo.
Finance Bill 2025: More Burden Than Relief?
While the Federation supports some elements of the Finance Bill 2025, it warns that certain proposals are raising red flags. Employers are especially concerned about:
A clause granting Kenya Revenue Authority (KRA) access to personal and trade data and extended tax refund periods of up to 180 days
These, FKE says, introduce legal and operational risks that are stifling confidence and undermining long-term planning.
“Policy unpredictability is killing strategic business growth,” Dr. Odera warned.
The latest data from the Kenya National Bureau of Statistics (KNBS) reveals a shrinking formal employment sector — a development that FKE sees as a wake-up call.
The Federation is now urging the government to enact targeted reforms to ease the burden on employers and unlock growth in the private sector.
“The private sector cannot be the cash cow for every fiscal shortfall,” said Mugo.
“We need a new deal — one that sees business not as a tax base, but as a job creator and a partner in economic growth.”
