Business

Report: Anti-government protests hit hard retailers, construction firms, and farmers

A view of Mfangano street after the aftermath of the protests which occured on June 25, 2024. (Photo: Hafsa Hassan)

By Bashir Mohammed | Friday, July 5, 2024

The PMI report for June shows a significant fall in private sector activity, with a measure of 47.2, down from 51.8 in May. The protests have resulted in near shutdowns in major urban centres, with businesses being looted and destroyed.

A recent survey by Stanbic Kenya has revealed that retailers, construction firms, and farmers have been the hardest hit by the ongoing countrywide anti-government demos. The sectors have experienced a significant decline in sales and output due to uncertainty surrounding the now-dropped Finance Bill 2024.

According to the Stanbic Kenya Purchasing Managers Index (PMI), customers have been withholding spending decisions, leading to a dip in purchasing quantities and inventories.

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“After two months of increased purchasing activity by firms, there was a dip in purchasing quantities and inventories because of reduced sales in several sectors, namely construction, agriculture, wholesale, and retail,” Christopher Legilisho, an economist with South African-based Standard Bank, the parent firm of Stanbic Bank, wrote in the PMI report for June.

“Input, purchase, and output prices recorded a mild increase in anticipation of the increased taxes proposed in the Finance Bill 2024. However, a stronger exchange rate and lower pump prices restrained costs.”

The PMI report for June shows a significant fall in private sector activity, with a measure of 47.2, down from 51.8 in May. The protests have resulted in near shutdowns in major urban centres, looting and destroying businesses.

The government's plan to increase taxes and cut expenditures has been put on hold, and the focus now shifts to rebuilding the economy. "After registering a solid expansion midway through the quarter, private sector output dropped markedly in June, in line with a renewed and steep fall in new business intakes," said analysts at Stanbic Bank and S&P Global.

The protests have hurt sales volumes, and job opportunities in the private sector have grown at the weakest rate since the beginning of the year. With the economy facing uncertainty, businesses are struggling to recover from the losses incurred during the protests.