The private sector in Kenya experienced a pronounced downturn in July, with the latest data revealing a significant contraction in business activity. According to a survey conducted by Stanbic Bank Kenya, the Purchasing Managers’ Index (PMI) plummeted to 43.1 from 47.2 in June. A PMI reading below 50.0 typically denotes a contraction in economic activity, underscoring the profound impact of recent political unrest on Kenya’s economic landscape.
The survey highlights that public protests against the government have severely undermined confidence in the economy. The unrest, which has been ongoing since mid-June, has had a tangible effect on business operations, disrupting commercial activity and deterring customer engagement. Stanbic Bank Kenya attributed the downturn to both direct and indirect consequences of the demonstrations.
“Political instability has induced a significant reluctance among customers to place new orders,” remarked Stanbic Bank Kenya in its commentary. “The protests have, in some instances, impeded access to business premises, resulting in closures and operational interruptions.”
The unrest, sparked by opposition to a now-retracted tax increase proposed by President William Ruto’s administration, has claimed over 50 lives, according to the Kenya National Commission on Human Rights (KNCHR). Although the tax legislation has been withdrawn, protests persist, with demonstrators now demanding the president’s resignation and calling for a halt to perceived government corruption and inefficiencies.
Economist Christopher Legilisho of Stanbic Bank emphasised that the ongoing disturbances have significantly dampened business conditions. “The deterioration in private sector activity reflects the sustained demonstrations and unrest, which have suppressed output and new orders,” he noted.
While the intensity of the protests has waned, the ramifications for Kenya’s private sector remain acute, as businesses grapple with the consequences of political instability and civil unrest. The situation presents a formidable challenge for the Kenyan economy, potentially affecting its recovery trajectory and broader economic stability in the near term.
