Kenya drops three positions in Africa trade index
Kenya has dropped three positions in a bi-annual index that tracks 10 African markets as enablers of trade and their challenges in business activity.
The country is ranked seventh on the Standard Bank Africa Trade Barometer in the August to September 2022 period, after registering the biggest declines relating to credit terms and government support for trade against the December 2021-January 2022 period. The country is behind South Africa, Ghana, Namibia, Uganda, and Mozambique but beat Nigeria, Zambia, and Angola.
It recorded a slight change in Kenya’s Survey Trade Barometer ranking while moving down to fifth from fourth position on the Quantitative Trade Barometer, driven by a lower-than-expected trade perception on export trade rules.
"There is no significant change in business confidence of Kenyan firms from before – positive sentiments are driven by the belief of good leadership and economic stability, whilst those firms who are not optimistic cite the poor economy and high prices of products as the main drivers,” the report stated.
“On most elements, Kenyan firms are placed in the bottom 40 per cent of the list, compared to other countries, and it is only on infrastructure obstacles, trade openness, and credit terms advance from suppliers where Kenyan firms are placed a little higher in the rankings.”
Stanbic’s Africa Trade Barometer offers data and insights on African markets and economies to enable businesses and entrepreneurs to identify, unlock opportunities and drive growth across the continent.
Free trade area
This is expected to support the growth of trade at a time African Continental Free Trade Area is to take off. The index is based on trade openness, access to finance, macroeconomic stability, infrastructure, foreign trade, governance, economic performance, and trade finance behaviour.
The report surveyed 2,554 firms during August and September 2022 for the second issue, representing small, big, and corporate businesses across all 10 economies and backed by information from World Bank, International Trade Center, and the central banks.
The report shows the ease of foreign trading has become more of a challenge for firms in Kenya reducing to 40 per cent from 43 per cent.
Trader financial behaviour recorded a decline in the credit terms extended to clients reducing to 37 per cent from 45 per cent, while credit terms advance from suppliers dropped to 44 per cent from 50 per cent.
“There is very low use of credit terms and not many traders extend credit terms to their clients either. Support is needed by providing leniency in terms of loans and funding that is flexible, less restrictive, and quicker access,” the report stated.
“On an overall level, Kenyan firms have a significantly lower expectation for import growth prospects, and the financial behaviour of traders is also worse than before in terms of extending and providing credit to customers. The economic gains, built after the pandemic, are under further pressures due to the war in Ukraine.” BY DAILY NATION
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