Export orders from Uganda improved business conditions in Kenya in April. This is according to a survey released on Monday by CfC Stanbic Bank. This comes after a slowdown recorded in the month of March.
The growth in trade with Uganda resumed in earnest after the conclusion of elections in March, says the bank.
“It’s business as usual in Uganda after the conclusion of elections in February and hence Kenya’s manufacturing exports have been robust,” said Jibran Qureishi, regional economist for East Africa at CfC Stanbic Bank.
The lender forecast that the completion of the standard gauge railway will further increase the trade with Uganda. The railway line is set to reach Nairobi by mid next year.
The railway is planned to be extended to Kisumu and Malaba at the border with Uganda.
“As regional infrastructure is bolstered, through developments such as the standard gauge railway, we believe this avenue will continue to show more promise in the coming years,” said the bank.
The improvement in trading will come as a relief for businesspeople since Uganda has traditionally been Kenya’s single largest export market.
There has also been considerable unease following the government’s failure to clinch an oil pipeline deal to transport Uganda’s oil through Kenya.
The deal instead went to Tanzania. The latest Purchasing Managers’ Index (PMI) data released by CfC Stanbic indicates a turnaround in growth of Kenya’s private sector, following a substantial slowdown at the end of the first quarter.
The PMI picked up from a five-month low to signal robust improvement in business conditions.
“Business conditions improved at a solid pace, helped by sharp expansions in output and new orders. Notably, the rise in total new business was boosted by a survey-record increase in new export work,” said the bank.
A general improvement in demand also resulted in acquisition of new clients, which led the firms to raise output.
Companies even shrugged off the negative events in the banking sector, where Chase Bank was placed under receivership on April 7, before being re-opened three weeks later.
The lender however noted despite the growth of purchasing activity, the rate of job creation eased slightly.