Kenya’s private-sector business activity slowed in June, hurt by a decline in credit growth and worries among investors about violence during August’s elections, a survey showed on Wednesday.
The Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI) dropped to 47.3 in June from 49.9 a month earlier. That was the lowest since the survey began in January 2014 and the third decline in the past four months.
Anything above 50.0 on the index indicates growth; anything below, contraction.
“The private sector continues to slow down due to the political uncertainty ahead, while reduced access to credit has also led to subdued domestic demand,” Jibran Qureishi, regional economist for East Africa at Stanbic Bank, said in a statement.
“Looking ahead, political uncertainty is likely to take centre stage.”
Voters will elect a president, parliament and local authorities on Aug. 8, and both investors and consumers are concerned about potential violence. Around 1,250 people were killed in ethnic violence after a disputed presidential election in 2007.
The Kenya National Bureau of Statistics said economic growth slowed to 4.7 percent in the first quarter, down from 5.9 percent in the same period of 2016. It blamed the slowdown on a regional drought and scarce credit.
Kenya forecasts its economy will grow 5.9 percent this year, compared with 5.8 percent in 2016. The World Bank predicts the economy will grow 5.5 percent.
Private-sector credit growth dropped to 3.3 percent in March from 17 percent at the end of 2015, after the central bank tightened regulations and introduced an interest rate cap. – Detailed PMI data are only available under licence from Markit and customers need to apply to Markit for a licence.