In Brief

Private sector slump on feedback loop of high costs

Deterioration of the Kenyan currency, high energy prices and a higher taxes pushed cost of living out of the reach of many Kenyan leading to decline in consumption and political unrests.Dampened demand and political unrests are now causing second hand impact on companies as sales remain low and costs elevate, that saw the Stanbic PMI index dip to 45.5 in July from 47.8 in June.With higher inflation, Central Bank of Kenya is also jerking up rates cutting the lifeline of financial flows to private sector that will make things tougher.This shows that only strong resilient business will survive through the current multiple crisis by cutting on costs, reducing leverage and passing on higher prices while maintaining increases within consumer elastic limits. 

“These days we think very carefully before incurring any new costs and one has to ask whether the cost is adding to the future. Is it enabling or is it a sunk cost? You need the right people to drive the culture of cost-efficiency so that you are conserving our profitability by managing our costs,” Jane Karuku is the EABL managing director told Business Daily.

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