Nairobi, Kenya
Despite the downward trend in fuel prices, interest rates and inflation indicators that spoiled the economy soup in 2011, a research conducted by Ipsos Synovate shows that business leaders believe the economy is on its recovery path.
The survey, in which 145 business leaders and representatives from large, medium and small enterprises in various sectors were polled, 46% of the leaders believe that the economy in 2012 is moderately or substantially better compared to last year.
The research that was carried out between July and August came up with the Business Leaders Confidence Index (BLCI), a corporate index that collects business leaders’ perceptions and uses them to provide business leaders, policy makers, development partners with information to complement existing economic indicators.
“42% of the interviewees believe that the economy is moderately or substantially worse while 12% believe it’s the same as last year,” said Ipsos Synovate managing director, Maggie Ireri, during the release of the findings at the Kenya Private Sector Alliance (KEPSA) offices in Nairobi.
The Kenya BLCI findings indicate that 47% believe that the economy today is performing moderately or substantially better than 6 months ago, with only 37% of the interviewed people showing a positive outlook for the next 6 months. With the electioneering period imminent, 40% believe the economy will worsen and 22% believe it will stay the same.
Ms Ireri noted that from the findings, last 6 months have seen the cost of doing business ease. This is attributed to the sharp fall in inflation to single digits and relative stability of the shilling.
“The two factors that have helped ease the cost of business are the shilling which is now trading at 84 to the dollar compared to 107 in October last year, and the Central Bank of Kenya (CBK) cutting the CBK Rate from 18% to 16.5% in July and further reducing it to 13% in September.
This has contributed to more banks borrowing from the CBK,” said Maggie, adding that inflation dipped to a new low of 7.74% in July this year, compared to the 19.72% registered in November last year.
“The dialogue between the business community and the government has enabled the two strike deals in terms of policy making and this has improved the business climate in the country, said the Kenya Private Sector Alliance (KEPSA) chairman Patrick Obath during the event.
The writer is a Communication and Journalism Student, Moi University
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