Kenyan firms eye export markets to mitigate loss of local trade

In Summary

• The pace in April was quicker than March but but slower than February's four-month high.

• Imports from the country also rose to Sh17.81 billion in 2018 from Sh17.17 billion in the previous year.

Jibran Qureishi
Jibran Qureishi
Image: FILE

Kenyan firms recorded an increase in new orders from Tanzania despite deteriorating operating conditions in the country, the monthly manufacturing industry index shows

According to the  April Purchasing Managers’ Index by Stanbic Bank Kenya new export orders once again rose sharply at the start of the second quarter of the year.

The pace in April was quicker than March but but slower than February's four-month high.

 

“New export orders were seemingly unaffected. Anecdotal evidence showed firms receiving higher orders from foreign markets such as Tanzania,” Stanbic Bank Regional Economist Jibran Qureishi said.

Even though the new orders experienced continuous growth since the end of 2017, general activities in the private sector suffered a hitch in the country due to poor weather conditions and low cash flows.

According to  the Economic Survey 2019, exports to the East African nation rose slightly by 4.31 per cent to Sh29.75 billion in 2018 from Sh28.52 billion in 2017.

The values had however declined in the past years from a high of Sh46 billion in 2012.

Imports from the country also rose to Sh17.81 billion in 2018 from Sh17.17 billion in the previous year.

The index shows that over 35 per cent of close to 400 private sector companies reduced output, to mark the first instance since November 2017.

“Firms were thus led to reduce output prices as they looked for new customers,” the index shows.

 

Input prices rose at a quicker pace, though a drier than expected weather inflated commodity prices.

The managers also attributed the poor business conditions to a slight reduction in outstanding work and lack of growth in new business.

“Backlogs of work have risen only once so far in 2019, although the latest easing was fractional,” the PMI stated.

This was evidence from a reported a marginal decline in workforce numbers due to employees leaving, weak sales and low money circulation.

Purchasing activity by firms increased in the month though at slower rate. Firms that purchased more inputs attributed it to new products and projects but however experienced weaker sales growth.

Purchase prices also increased sharply at the start of the second quarter following the high rate of inflation and increasing fuel prices.

According to Qureishi, firms maintained their optimism to plans to improve efficiency and expand into new markets over the coming year.