Federation of Kenya Employers urge government to create conducive environment for businesses to thrive

The Federation of Kenya Employers (FKE) has urged the government to consider putting measures that will help create a more conducive environment for businesses to thrive and contribute to long-term economic development.
In a statement addressed to the media, FKE has noted that in 2024, the business environment in the country posed significant challenges that resulted into low demand of products, high liquidity constraints, and rising costs of goods.
FKE chair Dr Gilda Odera and Executive Director and Chief Executive Officer, Jacqueline Mugo said some of the issues that contributed to the unconducive environment problems include increasing tax regimes, frequent legislative changes, shrinking market, and loss of competitiveness for businesses.
According to FKE, these challenges strained employers, resulting in the reduction in productivity, and thereby hindering job creation.
“They also led to redundancies, closure of businesses and difficulty in compliance with the Employment Act regarding the two-thirds limit set on payroll deductions for each month,” FKE said.
FKE suggested a raft of measures that they felt could help the businesses to grow.
The measures include improving the fiscal responsibility in the 2025/26 financial budget. FKE said the government should prioritize efficiency in public service delivery, honor contracts, including Collective Bargaining Agreements (CBAs).
Others include ensuring timely payment of bills including clearance of pending bills; strengthening accountability and transparency in budget making and execution to curb waste, fraud, and abuse.
They also urged the government to reduce spending on non-essentials and reallocate resources to programs with impactful economic development, ensure prudent debt management; reduce government bureaucracies and streamline government scope; remove duplication and overlap of roles in both national and county governments and among the ministries, departments, and agencies.
FKE also called on the government to adopt a stable, predictable, and progressive tax regime to foster business planning and long-term investment.
This approach will ensure fairness in taxation, alleviate the financial burden on businesses, and protect low-income earners, promoting economic inclusivity and sustainability.
FKE also urged the government not to introduce any new taxes that could burden businesses and increase payroll deductions.
“To support businesses and foster economic growth, there is a need to lower administrative, production, and service taxes while streamlining regulatory requirements to reduce compliance costs,” FKE said.
They also urged the government to establish standards and skills frameworks for businesses in order to boost competitiveness and economic growth.
The employers urged the government to find market opportunities, particularly for the small and medium sized enterprises (SMEs) to support their growth and innovation.
On labour relations, they urged the government to enhance financing of labour market institutions, strengthen the quality of social dialogue in the country and gazette members of the tripartite Labour institutions including the wages council that await gazettement such as Private Security Wages council, Hotel and Catering Trades Wages Council, and the Seafarers Wages Council.
FKE noted that there is need for the government to iron out issues causing problems in the implementation of the Social Health Insurance Fund (SHIF) and Social Health Authority (SHA).\
“Transparency, inclusivity, and clarity in governance and efficiency in operation remain key areas of concern for us. We urge the government to speedily look into these issues to ensure seamless access to healthcare by the Kenyans,” FKE said.