Company chief executives anticipate that the current global supply chain bottlenecks and high input costs such as freight costs and fuel prices could persist into the new year significantly hurting growth in the manufacturing industry.
The latest Central Bank of Kenya (CBK) survey on CEOs said global supply chain disruptions could leave firms unable to meet an increase in demand for goods as the economy recovers.
The survey findings also show that most manufacturers in Kenya were operating below capacity and could increase production if there was a sudden increase in orders.
Further, firms in the manufacturing sector were also concerned that increased political activity may affect the production of goods in the new year.
While concerns over the Covid-19 pandemic have eased, heads of companies expect that the growth of private sector firms over the next year could be constrained by heightened political activity.
Company CEOs reported that uncertainty created by rising political heat has become a significant risk that inhibits their ability to deliver on projects in key service areas.
Additionally, increased political activity may result in many customers adopting a ‘wait and see’ attitude on investment decisions.
The services sector, however, expects strong performance, with firms anticipating a significant increase in business activity in the first quarter, on account of seasonal factors, the study notes.
Further, firms in the agricultural sector foresee global economic recovery supporting demand and sales volumes.
The November survey revealed the highest business optimism about the growth prospects since the inaugural survey in March, this year.