A huge portfolio of pending bills owed to suppliers by both the State and County Governments continue to depress the outlook of many firms in 2020.
“The future output sub-index still indicates that firms are cautious on activity over the coming year. However, in comparison to most surveys since the beginning of this year, less panelists complained about cashflow issues this month.
Of course, needless to say, the government should continue to clear pending arrears owed to the private sector in order to alleviate these cashflow constraints,” said Jibran Qureshi-Regional Economist (East Africa) at Stanbic Bank.
He said that with the scrapping of the rate cap law, the private sector will now be in a better position than it has been over the past two and a half years.
Key findings of the monthly Purchase Managers Index(PMI), published by Stanbic Bank, shows that Kenyan businesses registered a solid improvement in the health of the private sector in November.
While cash flow issues have hindered business activity recently, fewer firms commented on this as reducing output in November. At the same time, increasing sales and good weather conditions helped to strengthen the uplift.
A steep increase in new work allowed firms to raise output at a faster pace. While businesses have been building their stock levels, this is the slowest rate in the past 9 months.
The Purchasing Managers’ Index is based on data compiled from monthly replies to questionnaires sent to purchasing executives in approximately 400 private sector companies, which have been carefully selected to accurately represent the true structure of the Kenyan economy, including agriculture, mining, manufacturing, construction, retail and services.
The headline PMI was unchanged at 53.2 in November, indicating a solid rate of growth in the Kenyan private sector that was slightly stronger than the average seen throughout the series (which began in January 2014).