NAIROBI, Sept 5 (Reuters) – Kenya’s private sector activity slumped in August, mainly due to worries over a tense presidential election held on Aug. 8, whose outcome has been invalidated by the Supreme Court, data from a survey showed on Tuesday.
The Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI) slid to 42.0 during the period from 48.1 in July, hitting a new low since the series began in January 2014. The PMI was well below the 50.0 level which separates growth and contraction in May.
Jibran Qureishi, the economist for East Africa at Stanbic Bank, blamed the concerns around the election, in which incumbent President Uhuru Kenyatta faced off against veteran
opposition leader Raila Odinga.
“This angst is likely to extend over the coming months due to the recent decision by the Supreme Court to nullify the presidential election results,” he said.
The shilling and Kenyan shares and dollar bonds had plunged on Friday after the court backed a petition brought by opposition Odinga and declared Kenyatta’s election victory
invalid. Qureishi said the decision could be positive.
“The decision by the court is indeed a reflection of Kenya’s strengthening institutions and will certainly appease the foreign investor community,” he said.
A disputed presidential vote in 2007 descended into ethnic violence in which 1,200 people were killed although the next poll in 2013 passed off peacefully.
A slowdown in private sector credit growth, mainly caused by a cap on commercial lending rates, has offered another drag to the economy in the run-up to the election.