Private sector growth slows in October – Markit Stanbic Bank

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Markit Stanbic report
PHOTO/COURTESY: Markit Stanbic Bank

By Reuters,

The country’s private sector activity grew at a slower pace in October after accelerating for five straight months, partly hurt by cash flow constraints among firms, a survey showed on Tuesday.

The Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI) for manufacturing and services eased to 53.2 from 54.1 in September. Any reading above 50 indicates growth.

Companies say the government is taking years to settle bills for goods and services supplied to it, mainly due to widespread corruption.

The cash flow challenges were being compounded by a cap on commercial lending rates that has curbed credit growth, said Jibran Qureishi, regional economist for East Africa at Markit Stanbic.

Last week, parliament’s finance committee said the legislature should repeal a cap on commercial lending rates, and parliament is scheduled to debate the committee’s report on Tuesday.

Qureishi appeared to think the move will be approved.

“The imminent repeal of the interest rate cap is indeed a positive move and will embolden commercial banks to price credit risk again and more importantly for SMEs,” said Qureishi.

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