Kenya PMI falls in April, first contraction in 17 months

NAIROBI: Activity in Kenya's private sector contracted for the first time in 17 months in April, hurt by drought and strained cash flows, a survey showed on Monday.

The Markit Stanbic Bank Kenya Purchasing Managers' Index (PMI) for manufacturing and services dropped to 49.3 from 51.0 in March. Any reading above 50 indicates growth.

"Given the delays in the long rains, the planting season for majority of farmers has been negatively impacted," Jibran Qureishi, regional economist for East Africa at Stanbic Bank, said.

"Granted, the long rains have started now, however private consumption is always also dragged lower during periods where the weather is poor owing to the high dependence on the agrarian sector."

April's figure was the lowest since November 2017, following a turbulent election period, when the PMI stood at 42.8.

The World Bank trimmed its forecast for Kenya's economic growth in 2019 to 5.7 percent in April from an earlier forecast of 5.8 percent because of the delay to the rainy season.

The government expects the economy to grow by 6.3 percent in 2019.

The survey showed private sector activity was hurt by cash flow problems arising from late payment of bills, especially by government departments.

"Various panelists continue to lament a lack of 'money circulation' which is creating cash flow issues. Clearly, the government isn't adequately addressing the arrears issue owed to the private sector," Qureishi said.