This archive report was first published on 5 September 2019.
Frosty weather conditions in tea-importing countries such as Pakistan have contributed to a slowdown in Kenya's private sector growth, new data shows. The latest Stanbic Bank Purchasing Managers' Index (PMI) reported a slow growth in exports in August, with the headline PMI dropping to 52.9 from 54.1 in July.
According to the report, this was the lowest level since May this year, with exports experiencing the slowest growth in 21 months. Tea earnings took a tumble, with the value of total exports declining to Sh156.9 billion in the first three months of this year, down from Sh161.7 billion during the same quarter of last year.
Regional East Africa Economist at Stanbic Bank Jibran Qureishi attributed the slowdown to seasonal concerns, citing the frosty cold weather in tea-importing countries. However, he noted that a slowdown in the global economy remained a broader medium-term concern, particularly with the ongoing trade war between China and the United States.
Despite the slowdown, companies reported a sharp rise in new orders over the month, driven by increased client numbers and larger purchases. However, others had cash flow issues, which hampered businesses' ability to keep up with new orders and led to increased backlogs for the fourth month running.
“For the first time since May, firms have once again voiced concerns around cash flow issues. To ensure inclusivity in economic growth, urgent reforms ought to be conducted on improving accessibility to credit for companies,” said Mr Qureishi.
