FKE Executive Director and CEO Jacqueline Mugo during a past press address. PHOTO | COURTESY
The Federation of Kenya Employers (FKE) has revealed that the country witnessed the loss of a staggering 70,000 jobs in the formal private sector between October 2022 and November 2023.
This even as FKE noted that 40 per cent of employers in the sector are still contemplating downsizing in order to cope with the drastic rise in operation costs in the country.
The federation, in a statement to newsrooms signed by National President Habil Olaka and Executive Director Jacqueline Mugo on Friday, noted that the state of employment in the country remains fragile as it is yet to find a recovery trajectory since the impact of the COVID-19 pandemic.
To make matters worse, the body argues, the cost of doing business in Kenya is now deemed unsustainable following the government’s recent enactment and implementation of the Finance Act, 2023 that brought with it a multitude of taxes.
Caught in the crossfire of a weakening shilling and a dilapidated economy, the FKE has now strongly criticized government policies, citing their adverse effects on businesses reliant on imports.
“The Kenyan shilling has experienced a sharp decline, losing 21% of its value between September 13, 2022, and November 22, 2023. The exchange rate against the USD has soared to 152.45, a significant jump from the 121.05 recorded during the same period in 2022,” read the statement.
According to FKE, this depreciation is attributed to capital flight and a reduced inflow of foreign currency, exacerbated by the low value of exports.
The employers’ body further notes that the cost of capital in Kenya remains prohibitively high, posing a formidable obstacle for the private sector.
Influenced by factors such as interest rates, inflation, market conditions, and government policies – FKE adds – the Central Bank of Kenya (CBK) raised its benchmark rate by 100 basis points to 10.5% on June 26, 2023, the highest since August 2016.
Consequently, borrowing costs have skyrocketed, rendering credit inaccessible for businesses and hindering overall growth.
The federation further decries the state of the economic landscape which it says is currently marred by a concerning inflation rate.
“As measured by the Consumer Price Index (CPI), the year-on-year inflation rate reached 6.9% in October 2023. Simultaneously, credit risk looms large, with the Gross Non-Performing Loans (NPLs) to Gross Loans Ratio standing at 15% at the end of the third quarter of 2023, a notable increase from the 13.3% recorded at the beginning of the year,” the report noted.