17 November 2017

Uganda: Kenya Politics Slows Business in Uganda

Kampala — Business activity in the Ugandan private sector has slightly slowed as the effects of political instability in Kenya found their way into the economy.

The Stanbic Purchasing Managers Index (PMI), a product of IHS Markit, indicates the headline figure was at 52.8 in October, up from 53.8 in September this year.

According to the report, the five monitored sub-sectors, agriculture, services, construction, wholesale and retail registered a boost in output and new business inflows in October.

According to The Economic Times, PMI is an indicator of business activity in manufacturing and services sectors.

A reading above 50 shows expansion of business activity while one below indicates it is shrinking.

Mr Jibran Qureishi, the regional economist at Stanbic Bank, explained that this was due to the impact of Kenya's instability.

He said: "We continue to see a gradual improvement in business conditions within the private sector in Uganda."

He added: "The pace of improvement has moderated somewhat since August which we would largely attribute to the enhanced and prolonged political risks in Uganda's key trading partner, Kenya. In fact, new orders slumped sharply during this period reflecting the sluggishness in trade between the two countries."

The compilers of this PMI report say rises in output, total new orders, employment and stocks of purchases supported the gradual improvement in business conditions in October.

Uganda is currently undertaking the construction of a number of large scale infrastructure projects with many more in the pipeline, key to their successful execution is the port of Mombasa which accounts for about 70 per cent of all imports.

Political instability in Kenya slows down processing times considerably at the port, leading to project delays with many contractors lacking the much needed raw materials and equipment necessary to carry out construction.

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