Markets

Uganda orders boost Kenyan businesses after poll-linked slowdown

trucks2

Trucks ferrying goods from Kenya wait to cross a border point. PHOTO | FILE

Summary

  • The growth in trade with Uganda resumed in earnest after the conclusion of elections in March according to a survey released by CfC Stanbic Bank.
  • The lender forecast that the completion of the standard gauge railway will further increase the trade with Uganda.

Export orders from Uganda improved business conditions in Kenya in April after a slowdown in March, a survey released by CfC Stanbic Bank on Monday.

The growth in trade with Uganda resumed in earnest after the conclusion of elections in March according to the bank.

“It’s business as usual in Uganda after the conclusion of elections in February and hence Kenya’s manufacturing exports have been robust,” said Jibran Qureishi, regional economist for East Africa at CfC Stanbic Bank.

The lender forecast that the completion of the standard gauge railway will further increase the trade with Uganda. The railway line is set to reach Nairobi by mid next year.

The railway is planned to be extended to Kisumu and Malaba at the border with Uganda.

“As regional infrastructure is bolstered, through developments such as the standard gauge railway, we believe this avenue will continue to show more promise in the coming years,” said the bank.

The improvement in trading will come as a relief for businesspeople since Uganda has traditionally been Kenya’s single largest export market.

There has also been considerable unease following the government’s failure to clinch an oil pipeline deal to transport Uganda’s oil through Kenya.

The deal instead went to Tanzania. The latest Purchasing Managers’ Index (PMI) data released by CfC Stanbic indicates a turnaround in growth of Kenya’s private sector, following a substantial slowdown at the end of the first quarter.

READ: Kenya doubles power exports to Uganda, Tanzania

The PMI picked up from a five-month low to signal robust improvement in business conditions.

“Business conditions improved at a solid pace, helped by sharp expansions in output and new orders. Notably, the rise in total new business was boosted by a survey-record increase in new export work,” said the bank.

A general improvement in demand also resulted in acquisition of new clients, which led the firms to raise output.

Companies even shrugged off the negative events in the banking sector, where Chase Bank was placed under receivership on April 7, before being re-opened three weeks later.

The lender however noted despite the growth of purchasing activity, the rate of job creation eased slightly.

However, cost pressures picked up slightly in April as both salaries and purchase prices rose faster than in March. This led to a renewed increase in charges, the survey showed.

“On the price front, charges rose on the back of a sharper increase in input costs,” said CfC Stanbic Bank.