According to the November Stanbic Bank Kenya Purchasing Managers Index (PMI), business conditions in Kenya have recorded the strongest improvement in more than five years. The Index rose to 55.0 in November, up from 52.5 in October.
That is the highest it has been since October 2020. Interpretation? Strong economic expansion across all sectors the economy.
Because this is different from the daily diet of negativity, let’s delve deeper.
First, the PMI is a composite figure - an index - derived from a monthly survey of purchasing managers in 400 leading Kenyan companies. It covers all sectors – agriculture, manufacturing, construction, wholesale, retail and services. It gives you insights into business confidence, conditions, and trends.
A weighted average of five key indices, it covers new orders, output (production), employment, suppliers' delivery times, and stocks of purchases. When the index is above 50.0, business conditions have improved relative to the previous month. When the index is below 50.0, conditions are deteriorating.
The November survey findings show a significant rise in new business, stronger output, faster employment growth and increased purchasing activity. These trends are driven by low inflation and increasing consumer demand.
Companies reported the fastest increase in sales volumes in more than five years. The momentum came from improved customer purchasing power, successful product launches, and effective marketing campaigns. All sectors recorded growth in new orders, so the recovery is across the economy.
Business activity expanded at the fastest rate since 2020, the result of stronger market demand and accelerated order inflows.
Responding to this, companies increased their input purchases significantly, with the highest growth rate over five years.
Supplier delivery times improved in November. Increased competition among vendors encouraged faster delivery. Led by the construction sector, stocks of purchases increased at the fastest rate in three years. Employment levels rose for the 10th month in a row, at the second fastest rate since August 2023. All sectors added staff.
The PMI is a timely and fairly accurate indicator of economic health. But I’m sure you may be asking like many Kenyans, if business conditions are improving, if inflation is low, if the exchange rate is stable, why am I not feeling it in my pocket?
Conditions are improving, but need to be sustained for a longer period for the effects to reach every citizen.
The narrative that Kenya is not working well cannot hold. While it is the job of the opposition to critique government, and offer better policy alternatives in a functioning democracy, political competition based on bashing each other, spewing negativity, bad-mouthing our republic is taking competitive politics way too far.
My casual observation conforms with the indications of the PMI. I spent last week in Wajir on a work assignment. It is easy to get to. Two flights daily to an international airport. A shared defense and civilian facility, the military is discretely tacked away, noticeable only because of they control the access point.
In one of those mysteries of markets, it is cheaper to fly to Wajir from Nairobi than to Nanyuki, half the distance. You can leave from Wilson or JKIA.
Once there, be sure to sample camel milk. Despite its name, I-Mall is not a shopping arcade. Rather, it is well-appointed hotel where my team and I stayed.
Governor Ahmed Abdullahi’s government has transformed Wajir town. Tarmacked town roads, complete with provision for non-motorised traffic. Devolution works.
Saturday found me in Nanyuki, enjoying a most colourful musical extravaganza. Lkereti – my culture – is a new album by the Maa musical group, Multisystem, led by artists Lentir and Nokisho.
The launch was quite the show. CS for Tourism and Wildlife was chief guest. On hand, the State Department for Tourism, KICC, Kenya Wildlife Service, and a galaxy of local political heavyweights. Thousands of fans filled the arena at the Nanyuki Showground. Talent, music and culture fusing to generate commercial outcomes.
As I drive out of Nanyuki on Sunday morning Mt Kenya is basking in the morning sun. I count half a dozen new hotels, restaurants and service stations between Ichuga and Naro Moru.
A couple of other structures look like factory buildings. Clearly something is going on.
As I return to the book I’m reading - Good economics for hard times - by Banerjee and Duflo, I ponder one more mystery. How is it that signs of economic recovery are everywhere, from Wajir to Nanyuki, but some citizens are still not feeling the effects?
Ndiritu Muriithi is an economist and partner at Ecocapp Capital. He is also the chairman of KRA and former governor of Laikipia County. Email: [email protected]
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