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.
Post-Brexit vote hits hard Kenyan businesses
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@steveumidha Kenyan businesses are beginning to feel the pain of a post-Brexit slump, new report has shown. Findings by Standard Chartered-MNI Business Sentimen@steveumidha Kenyan businesses are beginning to feel the pain of a post-Brexit slump, new report has shown. Findings by Standard Chartered-MNI Business Sentimen
@steveumidha -Banking & Finance sector lost an average of Sh166,727 per day -Large/Medium enterprise sector lost Sh 692,215 in 5 days of demos -Only 39 pc confident IEBC talks will be fruitful The banking and finance sector, Forex bureaus and restaurants bore the brunt of the five days anti-Independent Electoral and Boundaries Commission (IEBC) demonstrations that took place between May and June, 2016. A new survey has shown that the protests left massive financial toll on almost all businesses operating within the Central Business District (CBD) in Nairobi, with an average revenue lost per business per day of demonstrations estimated to have cost in the region of Sh48,304. According to the report released by Kenya Private Sector Alliance (KEPSA) and Trends & Insights For Africa (TIFA), local banks lost over Sh900,000 during the five days period compared to restaurants with operations in the CBD that suffered a loss of Sh150,000, while Forex bureaus incurred losses worth over Sh 60,000 during that perid. The study which was conducted late last month further reveals that the micro enterprises like boda-boda operators, newspaper vendors and hawkers also suffered from the protests - each reporting financial losses of Sh5,000, Sh 10,000 and Sh 3,000 respectively as the highest loss in revenue per day. TIFA's director of research Ms. Maggie Ireri said that majority of businesses operating in the CBD regardless of their size were equally impacted negatively from the demos due to limited flow of customers, while other businesses were affected from adverse looting from some protesters but were still ill-prepared in the event that a demonstration was to happen. "Small businesses are more likely to close down when impacted adversely by protests, this is because they lack preparedness and have limited resources," said Ms. Ireri. Kepsa's Chief executive Carol Kariuki yesterday said that Kenyan businesses were still operating in fear and that private sector remained lukewarm owing to the ongoing talks between government's Jubilee coalition and Opposition's Cord, with the latter agitating for the removal of IEBC commissioners from office, saying it lacks credibility to oversee next year's national polls. "Businesses are still unable to predict long-term impacts on the protests , while investors have grown cold feet as a result. Tourism sector is yet to recover from the after-math and the country's reputation portrayed in bad light," she said. The Confidence of Kenya's business sector remains low, as does its perception about the ongoing talks on IEBC, according to the survey. About 34 per cent of the respondents who were polled expressed lack of confidence that the IEBC talks will result to resolving the stalemate, compared to 39 per cent who said that the ongoing negotiations would result to tangible results, while 27 per cent were not sure whether anything would yield from the talks. The survey found that a whooping 56 per cent of the businesses felt that the current economic conditions had worsened as a result of the protests with a bigger number feeling that political temperatures currently being seeing could worsen the situation even further. The report comes exactly two days after KEPSA announced it had signed a resolution agreement in Mombasa with the Senate to ensure peaceful elections during the forthcoming elections at the closure of the third Speakers’ Roundtable between the Senate and the private sector lobby group. The two factions expressed fears that the upcoming elections if not managed well, would destabilize business and discourage investment in the country , leading to possible capital flight and destruction of property as evidenced in the 2007/8 Post- Election Violence. The poll findings also showed that the demos had longer terms impacts on other sectors like real estate and property, including a reduced taxable income for the national government and higher unemployment rate among Kenyans. The survey collected opinions from 509 private firms operating from the central business district including 13 industry heads in 16 streets within the town centre.