Business conditions in Kenya deteriorated in June as political uncertainty and lack of access to credit continue to weigh on demand of goods and services, a survey by Stanbic Bank and HIS Markit shows.
The Stanbic-IHS Markit Purchasing Managers Index (PMI) shows that June was the worst performing month since the survey began in January 2014.
“Down from 49.9 in May to 47.3 in June, the seasonally adjusted PMI fell to a survey-record low. Overall, the second quarter was the worst-performing quarter in the series history,” said Stanbic #ticker:CFC and Markit in the PMI report released Wednesday.
Readings above 50 on the index signal an improvement in business conditions on the previous month, while those below 50 show a deterioration.
“Firms frequently linked lower business activity to a lower customer turnout due to the political climate and weaker purchasing power among clients,” said the firms in the PMI report.
Campaigns for the August general election have sometimes been characterised by rhetoric that has led to fears of possible incidences of unrest, thus spooking both businesses and customers.
The economy is also going through its slowest period of credit growth in more than a decade.
Latest Central Bank data shows that in the one year to March 2017, credit to the private sector grew by only 3.3 per cent, far below the preferred 12 to 15 per cent that is considered optimum to fuel economic growth.
The manufacturing, business services and agriculture sectors have been hardest hit by the credit growth slowdown.
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