The Central Bank of Kenya (CBK) released its May 2025 CEO Survey, highlighting growing unease among Kenyan businesses due to recent U.S. policy changes.
The report notes that “a majority of respondents expect to be impacted by recent U.S. trade tariffs and policy shifts,” with 61% of surveyed CEOs reporting operational disruptions.
“The May 2025 CEOs Survey shows improved growth prospects for the Kenyan economy in the next 12 months, supported by macroeconomic stability, favourable weather conditions, and expectations of improved liquidity owing to declining bank lending rates.”
“However, muted consumer demand, elevated cost of doing business, the impact of trade wars, U.S. policy changes, and geopolitical tensions are key concerns,” reads part of the report.
U.S. Policy Shift Hits Hospitality Sector Hard
Kenya’s hospitality industry is grappling with significant setbacks tied to U.S. policy changes under President Donald Trump.
The survey states, “Some respondents reported lower conference bookings from NGOs and donor-funded programs due to U.S. policy-driven donor fund cuts.”
This decline stems from a January 2025 USAID ‘stop work order’—exempting only Israel, Egypt, and emergency food aid—and broad 10%–50% tariffs on imports from all countries.
Wider Economic Challenges
The CBK survey outlines several adverse effects on Kenyan firms:
- Higher import costs for inputs and finished goods
- Reduced export earnings, especially to the U.S., after the African Growth and Opportunity Act (AGOA) lapsed
- Rising production costs due to inflationary pressures
- Lower consumer demand from reduced disposable income and profits
These factors have led to “an elevated cost of doing business, cash flow challenges, and muted consumer demand,” potentially stunting company growth.
Labour Market and CEO Outlook
The survey indicates that 127 CEOs plan workforce reductions between July and September 2025, driven by rising costs and falling sales.
“CEOs planning layoffs cited the increased cost of doing business as a key driver,” the report explains.
While 703 of 1,000 CEOs intend to maintain staffing levels, optimism for job creation remains low.
Policy Recommendations for Resilience
To mitigate these challenges, the CBK proposes:
- Reducing business costs through lower taxes and addressing non-tariff trade barriers in East Africa
- Clearing pending bills to improve business cash flows and tackling corruption in government
For the hospitality sector, specific recommendations include:
- Targeted tax breaks or low-interest loans for affected businesses
- Diplomatic efforts to revise U.S. travel advisories and promote tourist safety
- Market diversification by boosting intra-African tourism and partnerships with countries like China
- Public-private task force to monitor global policy threats and coordinate responses
Outlook
Cytonn Investments concludes that “Trump-era policies have exposed vulnerabilities in Kenya’s hospitality sector.”
Yet, it sees an opportunity to “rethink Kenya’s tourism model, deepen regional and domestic markets, and future-proof the industry.”
By blending short-term relief with long-term innovation, Kenya can strengthen its hospitality sector as a resilient driver of economic growth.
