Bad news for jobless as CEOs see little hiring in East Africa
What you need to know:
- The survey of 51 leaders of large East African companies, including 19 in Kenya, found that industry captains are cautiously optimistic about recovery from last year’s bruising political season.
- The study by consultancy firm KPMG also sampled at least eight CEOs from Tanzania, Uganda, Rwanda and Ethiopia.
- It found that up to three-quarters of the CEOs expect a maximum growth of two per cent in gross revenue, which they expect to generate weak momentum that will yield less than five per cent rise in new job opportunities over three years.
The majority of business leaders in East Africa do not plan to hire additional staff any time soon, a new survey has found, painting a bleak future for jobseekers in the next three years.
The survey of 51 leaders of large East African companies, including 19 in Kenya, found that industry captains are cautiously optimistic about recovery from last year’s bruising political season.
The study by consultancy firm KPMG also sampled at least eight CEOs from Tanzania, Uganda, Rwanda and Ethiopia. It found that up to three-quarters of the CEOs expect a maximum growth of two per cent in gross revenue, which they expect to generate weak momentum that will yield less than five per cent rise in new job opportunities over three years.
“Hiring and growing revenue is always a chicken and egg situation. Before you go ahead and sink your capital into employing new people, new skills and so on, you also have to think about ‘what if I carry this investment and it doesn’t produce a return?” KPMG head of advisory for East Africa Gerald Kasimu said.
“Many CEOs …are saying ‘I want to see a demonstration that we are on a path to growth and, therefore, I can fund and afford that growth.”
Mr Kasimu described acquisition of new talent and driving growth as a delicate counter-balance that requires the right leadership to build the scale and capacity to invest in those resources.
KPMG found that the business leaders are worried about the “complex” operating environment that is characterised by emerging technology risks that threaten their companies’ growth prospects through digital transformation and cyber-attacks. Other concerns include rising cost of compliance with regulations and laws, stiffening competition and growing nationalism, especially in the US and the UK.
Mr Kasimu said most of the CEOs are keen to grow their businesses first and will only hire new talent once they see “signs and signal” of that growth.
Nine in every 10 of the CEOs exuded confidence in growth prospects of firms they lead, with six in 10 of Kenyan corporate chiefs setting sights on alliances with innovative start-ups to help grow their topline in three years.
The cautious approach by large firms stands in opposition to findings by Stanbic Bank Kenya Purchasing Managers Index (PMI) that business confidence was high and rising at a 27-month high in April.
The survey, based on feedback from about 400 firms largely in agriculture and manufacturing sectors, suggested increased production, new orders and stocks of purchases, with “the strongest rate of job creation reported since the end of 2016.”
Stanbic Bank economist for East Africa Jibran Qureishi said his findings showed “that the underlying demand conditions in the economy are consistent with a solid recovery in economic activity.”
Economists have projected Kenya’s growth to stand at between five and six per cent this year driven by reduced political tension which will boost growth and lower inflation expected to spur consumption by leaving purchasing power more or less intact.
