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Kenyan businesses are beginning to feel the pain of a post-Brexit slump, new report has shown.
Findings by Standard Chartered-MNI Business Sentiment Indicator (BSI) for Kenya shows that business conditions fell to 57.8 in July 2016 compared to 59.9 a month earlier – the lowest level since February as companies expressed concerns about the impact of Brexit on the economy and the shilling.
“While sentiment is still broadly positive firms have been less optimistic about current conditions in recent months, which could reflect softening economic momentum.
Businesses reported a significant slowdown in both domestic and external demand in July. As a result, firms have slowed hiring, and are holding less inventory,” said Razia Khan, Standard Chartered Chief Economist for Africa.
And while business environment improved during the period under review, albeit relatively weak, the report further indicate that the Kenyan businesses were more concerned in July about the impact of the currency on their businesses in the coming months.
The Kenyan shilling has remained relatively stable at the exchange rate following the UK’s vote to leave the EU on 23 June, despite concerns from Kenyan businesses that the shilling could come under pressure.
The report also indicate a decline in the demand for Kenyan firms’ goods in the period under review, which was attributed to the high interest rates paid by the firms, increasing by 4.2 per cent.
The report comes in the wake of earlier suggestions by top UK firms in Kenya who expressed confidence that Brexit would not curtail their operations in Kenya and would not consider moving jobs out of the country following UK’s vote to leave the European Union (EU).
“We are committed to the Kenyan market and do not have intentions to pull out. I’m not anticipating any material long term impact on us, may be short term we will have a little of that,” said British Airways Kenya’s commercial manager Mr. Kevin Leung in an interview with People Daily last month, adding that a plunging British pound and the anticipated slump in Britain’s economy would not cut into the number of UK passengers visiting the Kenya.