A majority of Kenyan businesses are not planning to expand their workforce in 2025, highlighting concerns over unemployment and economic stability.
According to the Kenya National Chamber of Commerce and Industry (KNCCI), 60 percent of businesses do not expect to hire this year due to high taxation, unfavourable policies, and limited access to capital. The findings were revealed during the launch of the 2025 Business Barometer report at Serena Hotel, Nairobi, on Tuesday, February 4.
The report, which surveyed nearly 2,000 businesses across the country, identified eight sectors likely to pause recruitment. These include retail and wholesale, professional services, hospitality and tourism, manufacturing and processing, transport, financial services, and mining.
“At the end of the day, businesses must match deductions made to employees. This increases operational costs, reducing their ability to hire,” said Kiplimo Kigen, a KNCCI researcher.
KNCCI President Erick K. Rutto noted that the private sector is struggling with policies that hinder growth, adding that business leaders are worried about taxation and regulatory challenges impacting the economy.
Despite the slowdown in hiring, the education, healthcare, and Information Communication and Technology (ICT) sectors remain optimistic about expanding their workforce in 2025.
The outlook contrasts with last year’s reports, where only 47% of businesses anticipated workforce reductions in Q4 2024, and just 25% in Q3 2024. Financial constraints are also limiting businesses’ ability to adopt climate change mitigation strategies, with 85% of those implementing such measures doing so without external support.
Economic analysts warn that continued hesitation in business expansion could worsen youth unemployment and strain household incomes.
“Over the past one or two years, shrinking disposable incomes for businesses and individuals have influenced these numbers. Around 65% of businesses cannot expand their workforce,” said economist Churchill Ogutu.
He further pointed out that stringent policies and high statutory deductions have negatively impacted businesses’ financial flexibility.
Despite weak hiring projections, 65% of businesses anticipate modest revenue growth in 2025, citing an expanding customer base and improved marketing strategies.
“Most businesses are looking to leverage technology, and they see positive macroeconomic trends in interest rates and inflation, which they hope will continue,” Kigen added.
The KNCCI Business Barometer provides key insights for policymakers and business leaders, with experts stressing the need for reforms in taxation, regulations, and access to capital to unlock private sector potential.
