Nairobi — Kenya declined slightly from fifth to sixth position on African states overall trade prospects, according to recent findings from the Stanbic Bank Africa Trade Barometer (SB ATB).

The report highlights concerns over fiscal policy changes and social unrest, notably stemming from the protests related to the June 2024 Finance Bill.

"While Kenya has faced some challenges in trade competitiveness, especially related to inflation and infrastructure, the thriving services sector demonstrates our capacity for growth," said Stanbic Head of Trade and Africa China Banking Paul Mungai.

The report, however, asserts that despite the challenges, Kenya's business confidence index remained steady at 55 points, reflecting mixed economic sentiments.

This stability is attributed to factors such as a successful Eurobond buyback, GDP growth, and subdued inflation, juxtaposed with concerns over contentious tax proposals and protests that have impacted trade and tourism.

The decline in Kenya's SB ATB ranking is linked to ongoing inflationary pressures, recent tax reforms, and a perceived decrease in government support for cross-border trade.

The government support index saw a significant drop, falling from 57 to 45, with businesses indicating a reduced confidence in government backing for cross-border initiatives.

Larger enterprises reported more favorable views on government support compared to smaller businesses, likely due to their better resource leverage.

Access to credit also emerged as a major challenge, with the index for credit conditions dropping from 49 to 45.

Rising interest rates have increased borrowing costs, prompting businesses to seek alternative financing, such as supplier credit.

Notably, mobile money transactions have gained traction, with usage for cross-border trade rising to 44 percent, while cash transactions decreased by 17 percent, reflecting concerns over security and currency volatility.