Nairobi, Kenya – A growing number of Kenyan businesses are closing down, cutting jobs, or slashing salaries as high operating costs and dwindling revenues push the private sector into crisis mode.
The Kenya Private Sector Alliance (KEPSA) confirmed that firms across multiple industries, including manufacturing, retail, and services, are facing unprecedented pressure. “Many companies are now at the edge. The rising cost of credit, increased taxation, and reduced consumer spending have combined to make survival nearly impossible,” said KEPSA Chief Executive Carole Kariuki.
Already, reports indicate that several mid-sized companies have wound up operations while larger firms are resorting to pay cuts and mass layoffs to stay afloat. In Nairobi’s industrial area, once a bustling hub, shuttered warehouses and empty offices now mark the economic downturn’s toll.
The crisis follows recent tax hikes under the Finance Act and rising energy costs, which have significantly eroded profit margins. According to the Federation of Kenya Employers (FKE), more than 40,000 jobs have been lost since January, with projections showing more could follow if conditions persist.
Small and medium enterprises (SMEs), which employ the majority of Kenyans, are bearing the brunt. “We are seeing SMEs shutting down almost weekly. Access to credit has dried up, and operational costs keep rising. Unless government intervenes, the economy will bleed jobs at a faster pace,” warned FKE Executive Director Jacqueline Mugo.
The situation has further depressed consumer spending as households grapple with high inflation. With salaries frozen or cut, purchasing power continues to shrink, feeding into a vicious cycle of weak demand and business closures.
Economists are now urging the government to cushion industries through tax incentives, affordable credit, and subsidies on energy. “Policy intervention is critical. Without relief, we risk a wave of corporate bankruptcies that could derail Kenya’s economic recovery,” said economist Dr. Jared Osoro in Nairobi.
As firms struggle to weather the storm, ordinary workers remain the hardest hit. For many, job loss or reduced pay means falling behind on rent, school fees, and basic necessities. The unfolding crisis paints a stark picture of the urgent reforms needed to stabilize Kenya’s fragile economy and restore investor confidence.
