Activity in Kenya’s private sector barely grew last month as slower credit growth and an ongoing drought in the country weighed on output, hiring and sales, a survey showed on Friday.
The Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI) dropped to 50.1, a record low since the survey began in January 2014, down from 52.0 in January. A reading above 50.0 marks growth.
“The ongoing drought and decline in private sector credit access will inevitably lead to deterioration in business conditions within the Kenyan private sector,” said Jibran Qureishi, regional economist for East Africa at Stanbic.
Like other countries in the region, Kenya is experiencing a drought that has hurt farming and left millions in need of food aid. Qureishi said if there is inadequate rainfall from next month, firms will face a tougher situation.
“This month’s historic low reading is symptomatic of these risks that we are flagging… we may potentially see an entrenched slowdown within the business operating environment,” he said.
Private sector credit growth, which started weakening at the end of 2015 after the central bank toughened supervision, stood at 4.3 percent in December, the central bank said, far below the double-digit growth rate it considers ideal.
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(Reporting by Duncan Miriri; Editing by Toby Chopra)