Profitable firms can ease pain of recession

Businesses have been going through tough times due to a depressed economy characterised by high inflation and external shocks such as the tumult in China’s financial market.

For this reason, the good performance of some local companies such as Safaricom and Cooperative Bank, which posted their six-month results Thursday, is worth appreciating.

Safaricom recorded Sh18.1 billion in profits, representing a 23 per cent increase in the six months up to September.

Cooperative Bank, on the other hand, posted Sh8.6 billion profit, a 36 per cent increase.

These two companies, and several others, demonstrate that there is hope despite the gloom.

Many factors account for their growth.

For example, Safaricom continues to ride on the wave of high uptake of telecommunication services as well the popularity of M-Pesa.

Cooperative Bank attributed its profit to expansion, especially its foray into South Sudan, as well as reorganisation and re-engineering of its branch operations.


Even so, it is hardly surprising for banks to post huge profits, given their appetite to raise interest rates every so often to shore up their earnings.

As these companies and others report good profits, it is incumbent upon them to share their windfall with the consumers and the society.

In particular, banks should keep in mind at all times the welfare of borrowers who will bear the brunt of the recent increase in interest rates from an average of 12-15 per cent to 27-28 per cent.

Safaricom should invest and innovate even more aggressively in improving the quality of its products and in that way share its good fortune with customers.

Profitability of Kenyan business is evidence that despite the corruption scandals in the public sector, parts of our economy are still working well.