Kenya experiences biz deterioration due to harsh economic slowdown

Business confidence in Kenya has come down for the first time in the last 16 months due to poor weather conditions that has resulted harsh economic slowdown.

According to a report released by the Stanbic Bank Kenya Purchasing Managers Index in Kenya’s capital, Nairobi, new orders were also broadly unchanged from March after continuous growth since the end of 2017. Kenya’s economic environment continues to suffer due to poor rainfall patterns that have seen the cost of basic commodities rise.

According to Journal du Cameroun, Purchasing Managers Index’s readings above 50.0 is a sign of improvement in business conditions on the previous month, while readings below 50.0 show a deterioration. The rate of inflation which measures the cost of various goods peaked to 6.58 percent in April 2019 from 4.4 percent in the previous month. It is the highest rate of inflation since September 2017, mainly pushed up by prices of food and transport.

“From 51.0 in March, the headline PMI slipped below the neutral 50.0 threshold to post 49.3 in April. This marked the first time in nearly one-and-a-half years that the series has fallen into contraction territory, signalling a slight deterioration in business conditions,” report noted.

“It was also the fourth successive drop in the headline reading. Driving the deterioration at Kenyan businesses was a marginal decline in activity in April. Some companies were affected by dry weather during the normal “long rains” season, leading to a reduction in agricultural output,” the report further added.

On the other hand, several firms have said about the issues related with money-circulation in the Kenyan economy that had a notable impact on the activity levels. Many firms also noted issues of cash flow reporting falling new orders in April.

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