Kenya’s economy suffered a hit to operating conditions in April, as activity and employment declined for the first time in 17 months in the wake of poor weather conditions and intensifying cash flow issues.

Markit’s monthly service sector PMI dropped to 49.3 in April below the neutral 50.0 threshold.

A reading below 50 indicates a contraction in the manufacturing sector while a reading above 50 represents expansion.

“This marked the first time in nearly one-and-a-half years that the series has fallen into contraction territory, signalling a slight deterioration in business conditions. It was also the fourth successive drop in the headline reading,” part of the report indicates.

Jibran Qureishi, Regional Economist E.A at Stanbic Bank commented that besides farmers being negatively impacted due to the delay in the long rains, “Various panelists continue to lament a lack of ‘money circulation’ which is creating cash flow issues. Clearly, the government isn’t adequately addressing the arrears issue owed to the private sector.”

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