Kenya Business Activity Grinds to a Halt in June: A Year's Lowest Point Amidst Protests and Spending Cuts
Nairobi, Kenya – Kenya’s private sector experienced a significant slowdown in June, marking the weakest performance in a year, according to a newly released business survey. The downturn was primarily fuelled by a noticeable dip in consumer spending and the disruptive impact of widespread protests that swept across the nation throughout the month.
The latest S&P Global Kenya Purchasing Managers’ Index (PMI) revealed a concerning contraction, signalling a shift from the modest growth seen in previous months. The PMI fell to 46.4 in June, down from 49.1 in May, well below the 50.0 threshold that separates expansion from contraction. This is the sharpest decline since July 2023.
Consumer Spending Takes a Hit
A key factor contributing to the slowdown was a considerable reduction in consumer spending. Rising living costs, exacerbated by recent tax increases and inflation, left households with less disposable income, leading to a decline in demand for both goods and services. Businesses reported fewer new orders and a general reluctance among consumers to make purchases.
Protests Disrupt Business Operations
The month of June was punctuated by a series of protests triggered by concerns over the rising cost of living and government policies. These demonstrations, while largely peaceful, caused significant disruptions to business operations across the country. Road closures, transportation delays, and safety concerns hampered supply chains and restricted access to workplaces, further impacting economic activity.
“The protests certainly played a role in the slowdown,” noted a spokesperson from S&P Global. “Businesses faced challenges in accessing their premises and transporting goods, while consumers were hesitant to venture out and shop.”
Impact on Key Sectors
The slowdown was felt across various sectors of the Kenyan economy. Manufacturing, retail, and services all experienced a decline in activity. While some sectors, such as agriculture, were less directly affected, the overall economic climate contributed to a sense of uncertainty and caution among businesses.
Looking Ahead: Challenges and Opportunities
The June data paints a challenging picture for the Kenyan economy. The combination of reduced consumer spending and protest-related disruptions has created a difficult environment for businesses. However, analysts suggest that the situation could improve in the coming months if the government takes steps to address the underlying issues driving consumer discontent. Easing inflationary pressures, providing targeted support to vulnerable households, and fostering a stable and predictable business environment could help to restore confidence and stimulate economic growth.
Despite the current challenges, Kenya’s long-term economic prospects remain positive. The country’s young and dynamic population, its strategic location, and its ongoing investments in infrastructure and technology provide a solid foundation for future growth. The key will be to navigate the current headwinds effectively and build a more resilient and inclusive economy.
