Business CEOs in fear of Ruto’s plan- Report
3 min read
Chief Executive Officers (CEOs) express concerns over President Ruto's plan according to Market Perception Survey report
Chief Executive Officers (CEOs) express concerns over President Ruto’s plan according to Market Perception Survey report.
1,000 Chief Executive Officers (CEOs) voiced their disapproval of certain of the president William Ruto’s administration’s initiatives, claiming that they will have a negative impact on their businesses in the upcoming year.
In a Market Perception Survey released on Saturday, June 3, by the Central Bank of Kenya (CBK), CEOs voiced their opposition to the idea of raising some taxes.
They also voiced concern that the rise in fuel prices and taxes was one of the things that would make it impossible for their business to operate in the coming year.
Along with fuel, they cited decreased liquidity and the devaluation of the Kenyan shilling as reasons for their apprehensions about the now-unpopular plans included in the 2023 Finance Bill.
Increased taxes
Among the issues that raised concern among the CEOs is the government plan to impose a 3 per cent levy on all workers to support Ruto’s Affordable Housing Agenda.
In the proposal contained in the Finance Bill 2023, employers would also give 3 per cent to match their employees’ contribution to the housing scheme.
Most CEOS opposed the plan maintaining that it could lead to massive job losses. They implored President William Ruto to postpone the plan.
However, Ruto insisted that the plan could not be postponed. He further dismissed claims that the 3 per cent deduction was a tax, insisting it was a levy.
“The programme therefore entails an entitlement aspect which gives priority to communities resident where the projects are situated. This way, the housing programme will raise the bar in terms of quality at the bottom,” Ruto stated in his Madaraka Day speech in Embu on Thursday, June 1.
Weakening Shilling
The country has been battling with the weakening shilling for a while now. Currently, the dollar exchange rate against the Kenyan shilling is Ksh137, according to CBK data.
To address the situation, Ruto adopted government to government deal to import fuel. He signed a deal with Saudi Arabia to reduce the pressure on the Kenyan shilling.
However, the intervention is yet to bear much-needed results.
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Fuel Prices
The CEOs also expressed worry that the increasing fuel prices would affect their businesses.
In the latest rates released by the Energy and Petroleum Authority of Kenya (EPRA) on May 14, Nairobi recorded the highest petrol prices increase to retail at Ksh182.70, Diesel increased to Ksh168.40, and Kerosene rose to Ksh161.13.
The oil marketers had earlier warned Ruto that fuel prices would hit Ksh200 over the plan to increase the value-added tax (VAT) levied on petroleum products to the standard rate of 16 per cent from the current rate of eight per cent.
The proposal is contained in the Finance Bill 2023, which Deputy President Rigathi Gachagua announced that it will be passed despite Azimio’s reservations.
Reduced Liquidity
CEOs also warned that reduced liquidity could affect their businesses in the next 12 months. Liquidity is a company’s ability to convert assets to cash or acquire cash through a loan or bank money to pay its short-term obligations or liabilities.
The reduced liquidity was triggered by investors fleeing the country. According to the 2023 African Economic Outlook (AEO) report, capitalists fled Kenya to search for safe assets. The weakening Kenyan shilling caused anxiety among investors prompting some to explore other markets.
However, CEOs expressed optimism in various sectors, including agriculture which they argued could be revived by the rains and bumper harvests.
“Optimism regarding growth prospects for the Kenyan economy improved, due to easing of inflation and expected increased agricultural production,” the report read in part.
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