By Lucky Sidney Mulerah
The Federation of Kenya Employers (FKE) has sounded the alarm over Kenya’s worsening investment environment, citing rising operational costs, unpredictable policies, and declining investor confidence as major threats to the country’s economic competitiveness.
Speaking at the federation’s 66th Annual General Meeting, FKE President Dr. Gilda Odera highlighted the challenges facing Kenyan businesses and warned that the nation is losing ground to regional competitors.
“The 2024 World Citizenship Report ranks Rwanda, Uganda, and Tanzania as more attractive destinations for high-net-worth individuals than Kenya — an unprecedented concern that underscores the urgent need to address our investment climate,” Dr. Odera said.
A key issue identified by the federation is the increasing burden on employers driven by statutory deductions such as the Social Health Insurance Fund (SHIF) contributions and housing levy, which continue to strain business operations.
The bleak job creation figures further compound the problem. According to the Kenya National Bureau of Statistics (KNBS), formal sector job creation dropped sharply to 75,500 in 2024 from 123,000 the previous year, at a time when between 800,000 and 1.2 million new job seekers enter the market annually.
FKE Chief Executive Officer Jacqueline Mugo noted, “This decline comes amidst a labor market with over 5 million unemployed individuals. Kenya is educating its youth for a lifetime of unemployment unless urgent action is taken.”
The federation also expressed serious concerns over certain provisions in the 2025 Finance Bill, including a controversial clause that would grant the Kenya Revenue Authority (KRA) access to businesses’ trade secrets and personal data, as well as extended tax refund timelines of up to 180 days — issues causing significant anxiety among employers.
Recent data from KNBS indicates a shrinking formal employment sector, intensifying worries about the country's ability to absorb a growing workforce.
In response, the Federation of Kenya Employers is urging the government to implement targeted reforms aimed at stimulating private sector growth, generating jobs, and restoring investor confidence.
“The private sector remains the engine of economic growth. It is critical that the government creates an enabling environment that supports businesses and encourages investment,” Dr. Odera concluded.
With Kenya’s investment outlook at a crossroads, stakeholders are calling for swift action to safeguard the country’s economic future.
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