Private Sector Activity Recovers in August After Anti-Tax Protests

Kenya’s private sector activity recovered marginally in the month of August after disruption by the anti-Finance Bill 2024 protest.

• However, despite an improvement in business conditions, confidence towards future activity levels sank further in August. 

• Stanbic Bank says in its latest PMI survey that the level of optimism was the lowest recorded in the series history (since 2024), with only 5 per cent of companies expecting growth over the next 12 months.

“August PMIs show the private sector recovering merely marginally. Output and new orders improved after slumping during the months preceding, as anti-tax protests have been fizzling out. However, concerns linger about consumer spending, with many firms noting overall demand as weak in a tougher economic and business environment. Consequently, firms cut employment after seven months of robust hiring; work backlogs therefore increased,” said Christopher Legilisho, Economist at Standard Bank.

“Business expectations worsened in August, implying firms are less hopeful about output over the next 12 months,” said Legilisho.

With the marginal rise in sales following a steep downturn in July, firms opted to reduce their staff numbers over the latest survey period, marking the first decline in 2024 so far. However, firms did raise their purchases of inputs, which was the first expansion in three months.

This led to a slight increase in input inventories, supported by a renewed improvement in suppliers' delivery times. According to survey respondents, the cost pressures across the private sector intensified in August due to rises in import fees and tax burdens.

Stay updated on this and other stories on The Kenyan Wall Street.

China Pledges Kshs. 6.5 trillion to Africa amidst Repayment Concerns

China's President Xi Jinping has committed 360 billion yuan ($50.70 billion, Kshs. 6.512 trillion*) in financing to the continent and at least one million jobs at the ongoing Forum on China-Africa Cooperation Summit in Beijing.

• 58.3 percent of the financial assistance will be channelled as credit, while 22.6 percent will be invested by Chinese companies over the next three years.

• Jinping also pledged to expand access for goods from the continent to the Chinese market.

• At the summit, 50 African leaders and China signed an action plan for the next three years, which includes a call to establish a rating agency for the continent.

Jinping also promised to assist the continent create "at least one million jobs." "China is ready to deepen cooperation with African countries in industry, agriculture, infrastructure, trade and investment," he added.

The Debt Question

China pledges come at the back of renewed debt flow onto the continent after a five-year slowdown. In 2023, the East Asian giant loaned $4.61bn which while still far below the high levels seen between 2009 and 2018, is the highest since 2019.

Debt repayment has been a lingering concern for many African economies, after a decade of binging on different kinds of debt to fund infrastructure projects. At the summit, UN Secretary General Antonio Guterres said that debt hampers development. "Many African countries are mired in debt and struggling to invest in sustainable development," Guterres said.

"They have no access to effective debt relief, scarce resources, and clearly insufficient concessional funding to respond to the basic needs of their population," he said. 

He also highlighted the need to "correct some historic injustices" such as the fact that Africa does not have a permanent seat at the UN Security Council.

China's Basket of Promises

At bilateral meetings in the lead up to the Summit, Tanzania got a commitment for assistance in completing the TAZARA railway that connects the country to Zambia. Zambia signed a partnership on solar panels for its state utility firm, while Nigeria signed a wide ranging deal including collaboration in developing "transportation, ports and free trade zones." Kenya obtained a commitment to cooperate in completing the Standard Gauge Railway and the Rironi-Mau Summit-Malaba road. 

The Summit coincides with a similar event hosted by Indonesia, which saw a smaller turnout as most African nations chose to send delegations to China. About 29 nations sent delegations to the Bali summit, where Indonesia plans to sign business deals worth $3.5billion.

• (1 Chinese Yuan=KShs. 18.09)

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