Ruto, Raila Talks End 6-Month Losses Streak for Businesses
President William Ruto and Azimio leader Raila Odinga’s decision to temporarily halt their political dispute and call for ceasefire talks have had a positive impact on private businesses in Kenya, according to the latest Stanbic Bank Kenya Purchasing Managers Index (PMI) released on Tuesday, September 5.
A PMI survey of over 400 private businesses revealed that their activities expanded in August, ending a six-month contraction.
The expansion was a result of greater political stability, which benefited both the services and manufacturing sectors. The PMI increased to 50.6 in August, up from July’s 45.5, signifying the first time since February that it reached the pivotal 50-point threshold, distinguishing growth from contraction.
“Many of the companies surveyed revealed political stability had helped to boost demand and lead to higher activity,” Stanbic noted.
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Following the opposition leader Raila Odinga’s decision to call off protests in August, business operations continued uninterrupted.
Raila’s announcement indicated that the move was intended to give the government a 60-day window to address the opposition’s and civil organizations’ concerns.
Significant concerns
Despite the positive development, the survey revealed that Kenya’s economy has not yet recovered due to the current business climate and government policies.
Specifically, the PMI identified the devaluation of the shilling against major currencies as one of the reasons why so many businesses were experiencing difficulties.
In addition, the Finance Act of 2023 has resulted in a rise in taxation, resulting in higher costs for Kenyan enterprises.
Christopher Legilisho, an economist at Stanbic Bank, said in the statement, “Difficult economic conditions and inflationary pressures remain a major concern.”
The current value of the sterling against the dollar is 145.7, which is a record low.
Due to more expensive imports, the devaluation of the shilling has negatively impacted private businesses and exposed the government to debt servicing difficulties.
Ruto, Raila Talks End 6-Month Losses Streak for Businesses