Hurdles That Threaten Kenya’s Private Sector Growth in 2025

The growth of Kenya’s private sector in 2025 faces significant hurdles due to high taxation, unfavorable government policies, and limited access to capital, according to the latest Kenya National Chamber of Commerce and Industry (KNCCI) Business Barometer Report.

The report, which surveyed businesses across various sectors, identified high taxes and restrictive policies as the top concerns, with 29.0 per cent of respondents citing them as major barriers to business performance.

Limited access to finance followed closely, with 23.4 per cent of businesses struggling to secure capital for growth.
Other key challenges highlighted include market-related difficulties such as intense competition, low customer demand, and weak purchasing power (16.1 per cent), supply chain disruptions (12.1 per cent), and staffing and labor constraints (8.1 per cent).

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Climate change and natural calamities were flagged by 6.5 per cent of businesses, while insecurity (3.2 per cent) and other concerns (1.6 per cent) also contributed to the challenging business environment.

To navigate these obstacles, businesses emphasized the need for greater financial support, with 32.9 per cent calling for improved access to capital.

A more favorable regulatory framework and better government policies were also critical priorities for 24.5 per cent of respondents.

Additionally, businesses highlighted the need for enhanced market access (14.0 per cent), technological innovation support (10.5 per cent), and training and capacity-building initiatives (9.1 per cent).

Infrastructure improvements, including transport, logistics, and energy, were cited by 5.6 per cent of businesses, while 3.5 per cent pointed to other factors.

With taxation and regulatory policies being key concerns, business leaders and industry stakeholders are urging the government to implement tax reforms and create a more business-friendly environment.

The report underscores the urgent need for strategic interventions to sustain the growth of Kenya’s private sector in the coming year.