CEOs alarmed by high poverty index among key consumers

Behind the confidence that East African Breweries Plc (EABL) will not face challenges in raising Sh20 billion through the corporate bond it has floated, Group Chief Executive Jane Karuku harbours concern about how the market is performing.

Even the positive aspects of it, evident by the performance of the Nairobi Securities Exchange (NSE), stable inflation figures and dropping interest rate, she says, do not tell the actual picture of why the market is the way it is – an ugly hourglass – where those at the top are doing well, while those at the bottom are struggling.

“We still cannot figure it out. Even in terms of NSE market capitalisation, I still have to figure out why share prices are going up in Kenya, yet there are so many questions around our ecosystem,” she says.

While the tip of the iceberg has been seen as beautiful and shiny against the sun, with all these figures that portray an economy that has pushed itself against global shocks, Karuku cautions about consumers’ discretionary spending.

“We have what I call an ugly hourglass in business where the top is very vibrant, growing well, while the middle is shrinking fast, and they are dropping to the bottom, a bad shape which is not good for the sustainability of a business,” she says.

“We need to be careful when we talk about optimism.” Karuku made the comments during a discussion on the just-released 2025 KPMG Africa CEOs Outlook report. The report shows CEOs’ confidence in growth prospects for their companies improved in 2025 to 79 per cent from 64 per cent in 2024.

It also speaks of ‘a quiet sense of optimism’ taking shape. “While global uncertainty continues to cast a shadow over business sentiment, confidence among African CEOs is showing early signs of recovery,” the report says in part.

“This year, 53 per cent of CEOs across the continent expressed confidence in the growth prospects of the global economy over the next three years compared to 68 per cent of CEOs globally.” The report adds that confidence has further strengthened, particularly when CEOs assess prospects in their domestic economies.

“Some 63 per cent of African business leaders expressed confidence in the growth outlook for their respective countries, up from 61 per cent in 2024 - pointing towards a gradual rise in optimism around domestic economic stability and opportunity,” the report says.

It is this optimism documented in the report that Karuku sought to debunk.

“There is optimism. Of course, we know our region (Africa) is a high-margin business. We have the youth dividend as well as many risks,” she said, documenting recent political events in Tanzania. “We have gone to the market (to raise Sh20 billion) and I don’t think we will have a problem indexing that times two. It shows either its confidence in fast-moving consumer goods, EABL, or there is a lot of cash starting to come back because of global shocks.”

Structural resilience

For Matthew Mukisu, Director Corporate Services at the Capital Markets Authority (CMA), the confidence of CEOs as documented in the report stems from the structural resilience and a niche in the business they are running.

The demographic advantage, citing the continent’s median age of 19, is also a factor, as he debunked the political chaos usually associated with this market. “The uncertainty is predictive in itself. Businesses have looked at that and have factored in geopolitical tensions, which have since eased a bit,” he said.

He said CEOs are riding on the fact that tensions in markets such as the US and China are easing, as well as cooling temperatures in the Russia-Ukraine war, which heavily affected the supply chain.

“Market capitalisation in NSE in the last 12 months has gone up by over Sh1 trillion. That more points to investor confidence and money is coming back,” said Mukisu.

Besides these glossy narratives, the country has witnessed businesses closing shop due to a tough economic environment, as documented by The Federation of Employers Kenya (FKE), with hundreds of workers being let go. While the interest rate has been dropping for a year to now below 10 per cent, the cost of credit remains as high as 15 per cent. 

KPMG Africa Chief Executive Ignatius Sehoole says such an economic paradox requires businesses to invest in the social aspect of environment, social and corporate governance (ESG).

This will lift the very society that the businesses serve and draw their optimism from. “This is a CEOs’ survey where in the hourglass do they sit? It is at the top. Therefore, our future is bright. But what about the people who sustain us, who are our customers? If they drop more and more to the bottom, we are in danger,” he said.

He stated that ESG must be integrated into the core strategy of business to uplift those at the bottom of the pyramid. “Climate change is important, but I think social issues are just as important,” he said.