By Ambrose Gahene
Stanbic Bank Uganda released its headline Purchase Managers Index (PMI) index for December 2017 which indictated that there had been further improvement in the health of the Ugandan Private sector. At 54.3 index in December, down slightly from 54.9 index in November, The headline figure remained above the series average as output new orders, employment and purchases of stocks all contributed to the above 50.0 index figure.
Releasing the December PMI results, Jibran Qureishi, Stanbic Bank’s Regional Economist for East Africa said, “The PMI has averaged 54.0 index in the fourth quarter of 2017 up from an average of 52.4 index in the nine months to September, as economic activity gradually improves.”
“While there have been signs of a pick-up in private sector lending by commercial banks, the high Non Performing Loan (NPL) ratios within the banking sector will probably keep the recovery moderate. That being said, an increase in public investment expenditure keeps up optimism that GDP growth will remain on upward trajectory over the coming year.” Jibran added.
Public investment expenditure, projected at 21.1 per cent of GDP in FY2017/18 has been singled out as key to supporting the transformation of the economy. With that aim in mind the Government of Uganda prioritized infrastructural development in the 2017-18 budget by giving it the second highest budgetary allocation. Mr. Okwenje Benoni Stanbic Bank’s Fixed Income Manager noted “Stanbic Bank plays a key role in supporting the development of Uganda’s infrastructure by providing the essential Bank guarantees, Letters of Credit, by purchasing Government bonds and holding escrow accounts for contracted parties. These off-balance sheet financial instruments and business solutions were worth over one trillion shillings in 2017.”
Evaluating the performance of the various sectors Benoni revealed, “Improvements in operating conditions were broad -based, as the five monitored sub-sectors (agriculture, services, wholesale & retail, construction and industry) each registered stronger business conditions.”
“Growth in the volume of new orders received at Ugandan private sector companies continued in December. Amid an easing in political tensions in key trading partners, total new business was boosted by export orders for the second successive month. Th
is drove companies to expand their output for the eleventh month running. Higher client demand underpinned the expansions in both output and new business.” Benoni concluded.
The PMI is a composite index, calculated as a weighted average of five individual sub-components: New Orders (30 per cent), Output (25 per cent), Employment (20 per cent), Suppliers’ Delivery Times (15 per cent) and Stocks of Purchases (10 per cent). Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show deterioration.
About Stanbic Bank Uganda
Stanbic Bank Uganda is a member of the Standard Bank Group, Africa’s largest bank by assets. Standard Bank Group reported total assets of R1,98 trillion (about USD128 billion) at 31 December 2015, while its market capitalization was R184 billion (about USD11,8 billion).
The group has direct, on-the-ground representation in 20 African countries. Standard Bank Group has 1 221 branches and 8 815 ATMs in Africa, making it one of the largest banking networks on the continent. It provides global connections backed by deep insights into the countries where it operates.
Stanbic Bank Uganda provides the full spectrum of financial services. Its Corporate & Investment Banking division serves a wide range of requirements for banking, finance, trading, investment, risk management and advisory services. Corporate & Investment Banking delivers this comprehensive range of products and services relating to: investment banking; global markets; and global transactional products and services.
Stanbic Bank Uganda personal & business banking unit offers banking and other financial services to individuals and small-to-medium enterprises. This unit serves the increasing need among Africa’s small business and individual customers for banking products that can meet their shifting expectations and growing wealth.