Business confidence dips on low credit access, political activity

The business community’s confidence on the economy continued to wane in September as a result of heightened political activity as well as lack of credit access. The Markit Stanbic Bank Kenya Purchasing Managers’ Index used to measure private sector confidence fell to 40.9 from 42 points in August, the lowest reading since the data series began in January 2014. The level is also way below the 50-point line separating a slowdown in economic activity from perceived growth. Stanbic Bank Economist for East Africa Jibran Qureishi said the twin effects of lack of credit and political noise continue to give cloud businesses outlook of growth for the year. “For a fifth consecutive month, conditions in Kenya’s private sector continued to deteriorate, which is reflective of the protracted political impasse in the country….. firms continue to bemoan the unavailability of access to credit, which has been restrained as a consequence of the interest rate capping law,” Mr Qureishi said. Kenya is set to hold a presidential election re run later this month but the opposition coalition has continued to voice its dissatisfaction with the IEBC’s preparations threatening to boycott the poll. The treasury has already revised 2017’s growth estimates to 5.0 percent from an earlier target of 5.6 percent on slow revenue collection and business activity. The report indicates that amid reports of weak customer demand, new business declined for the second month in succession. This has seen companies slow down job creation, but marginal job cuts were reported during the period.

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