KENYA – Simbisa Kenya Limited, the parent company of popular fast food chains Chicken Inn and Pizza Inn, has reported a significant drop in earnings for the fiscal year ending in June.

The decline in profitability has been attributed to the challenging economic conditions in Kenya, as stated by Simbisa Brands, headquartered in Harare.

The multinational company cited a 13% decline in the operating profit of the region, primarily due to the economic challenges faced by the Kenyan market.

“These challenges were influenced by factors such as uncertainty surrounding elections, high inflation, and business disruptions resulting from cost-of-living protests. These issues significantly impacted customer demand and overall earnings,” the company stated.

Pre-tax earnings from Simbisa’s operations in Kenya, Zambia, Ghana, and Mauritius fell from US$12.9 million in the previous year to US$7.3 million in the review period.

However, the company noted that sales in the region grew, reaching $92.8 million, up from $89 million.

Despite the economic challenges faced by consumers in Kenya, Simbisa remains committed to expanding its presence in the country, recognizing its long-term growth potential.

“However, the group remains committed to growing its footprint in the region, particularly in Kenya, where growth opportunities remain abundant.”

This news comes amid global supply shocks that have led to increased prices for essential food staples in Kenya, including rice, wheat, maize, sugar, and onions.

Factors such as protectionist decisions in India and Eastern Europe, supply disruptions due to the conflict in Ukraine, and poor weather affecting neighbouring Tanzania’s onion supply have contributed to this new food crisis.

According to analysts, Wheat prices earlier this year, faced pressure following Russia’s withdrawal from an agreement that allowed the export of Ukrainian agricultural goods via the Black Sea. This raised concerns about Africa’s food security.

Additionally, Russia’s destruction of critical storage infrastructure in Ukraine heightened fears of further supply disruptions, resulting in higher food prices.

The ongoing Ukrainian war and the lingering effects of the COVID-19 pandemic already increased the prices of cooking oil, maize, and wheat products.

The new supply shocks were expected to exacerbate the existing food crisis, potentially rolling back some of the gains the country has made in recent years.

Despite these challenges, Kenya’s President William Ruto has emphasized the importance of the country’s food production efforts, including a fertilizer subsidy program aimed at boosting crop yields.

However, the ban on rice exports by India, a major supplier to Kenya, is expected to impact the supply and prices of this essential cereal in the country.