A Bata attendant fits a shoe on a child as the mother looks on. A survey shows that Kenyan private firms recorded growth in the last eight months as demand increased. PHOTO | JOSEPH KANYI
Kenyan businesses enjoyed their fastest rate of growth in seven months last December boosted by rising demand for goods and services spurring higher output, a monthly industry survey by CfC Stanbic shows.
According to the CfC Stanbic Purchasing Managers Index (PMI) appraisal for December, businesses also enjoyed lower purchasing prices for inputs, ensuring that cost pressures remained relatively subdued.
Companies as a result were able to hire more people as they opened new branches and upped salaries at the highest rate in four months, offering relief to workers during a time inflation rose to a 16-month-high of 8.01 per cent.
“The private sector closed the year on a strong note as the PMI rose to an eight-month high of 55.5 from 53.7 in the previous month and a survey-record low of 51.7 in October,” said CfC Stanbic economist Jibran Qureishi.
“Despite the ongoing challenges in the tourism sector for the most part of 2015 and erratic weather patterns that suppressed agricultural production in the first half of the year, the Kenyan private sector has weathered the storm in what we think was an incredibly challenging global environment in 2015,” he said.
The weakening and volatility of the shilling in the middle of the year had dampened the prospects for businesses due to the attendant increase in import costs, but the currency has largely stabilised going into 2016.
The PMI is based on monthly data compiled from purchasing executives in approximately 400 private companies in the sectors of agriculture, mining, manufacturing, construction, retail and services.
The surveyed managers cited the construction sector as key driver of growth in November and December. Alongside agriculture, it was also cited by the Kenya National Bureau of Statistics (KNBS) as key in pushing up the economy’s quarter three growth rate to 5.8 per cent compared to 5.2 per cent in the same period in 2014.
The growth in construction was supported by increased credit to the sector, the statistics bureau said.
According to Mr Qureishi the economy’s growth rate this year is likely to come in at 5.3 per cent, which would however be below the Treasury’s target of between 5.5 and six per cent.
An uptick in private sector output and the hiring of additional workers will be welcome news to the government in terms of revenue collection, given that the country was lagging behind tax targets through the first quarter of the 2015-16 fiscal year.
The Kenya Revenue Authority reported missing the tax target in quarter one by Sh28 billion as companies performed badly.
Businesses however reported in December that tariffs and charges rose at the fastest rate since August, with the authorities banking on the ability of the businesses to pass on higher costs due to the strength of client demand.
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