Investment forums, sentiment and growth

While the towns have not been promoted in the same way as Konza, governments have certainly made effort over the years, including by creating a Ministry of Nairobi Metropolitan during Kibaki’s second term.

The purpose was to come up with a first-class African metropolis, with a thriving economy, modern infrastructure and high-quality living environment.

As one of the speakers in, and organiser of, the Laikipia economic and investment conference, the Professor’s questions made me pause.

Will sponsors get value for their money. Will it be of use to the participants, I fussed. But I need not have worried. The plenary sessions at the conference were standing room only. Sampling reactions on the social media platform Facebook over the weekend, brought more smiles.

“Well in. We want to have such forums in Laikipia frequently”, run one comment. “Great job! Those are the kind of things we want to hear and see in our county,” said another. “Great! If possible kindly have the discussions and presentations from the different speakers uploaded online for those of us who didn’t make it to consume the ideas”

“It was a very interactive and informative session. Personally, I learned a lot” the reactions continued. “Thank you. Can it be done in every ward? “This is what our people need”. “Good work. Kenyans need leaders who will support and give them an enabling environment”. The commentary was overwhelmingly positive. Sentiment is a key driver of economic growth.

Obviously, social media comments are antidotal, from a biased sample of my followers on Facebook, and cannot be reliable data for tracking sentiment. We can, however, put more faith in formal survey data.

It is clear that how consumers feel about their personal finances and their confidence in the overall economy, influences their spending habits.

High confidence leads to increased spending, boosting economic growth, while low confidence results in reduced spending, which slows down economic activity.

Similarly, business confidence directly influences investment and spending decisions, key drivers of economic growth. When businesses are confident about the future, they are more likely to invest in new projects, hire more employees, and expand operations, leading to increased economic activity and job creation. Conversely, low business confidence leads to decreased investment and hiring, slowing growth.

Both consumer and business confidence are measured through surveys that assess individual and business leaders' perceptions and expectations about the economy. These surveys collect data on current business terms, future expectations, and investment plans.

The surveys also ask about individual’s financial situation, employment prospects, and spending intentions. Responses are aggregated to create a composite index, which serves as a key economic indicator.

The Purchasing Managers Index (PMI) is one such survey, measuring business confidence. It is conducted monthly by Stanbic Bank.

Business conditions were poor last June, leading to a contraction in business activity. The PMI survey respondents attributed the decline to disruptions from protests, lower customer spending, and challenging economic conditions. There was a steep fall in new orders, with over one third of surveyed businesses reporting reduced sales.

It is too early to call a trend, but business expectations picked up in June, a very positive result. The Future Output Index jumped sharply higher with 18 percent of business managers surveyed optimistic that they could increase their output over the next 12 months.

The index was five percent in April and four percent in May. It indicates stronger expectations for upcoming activity levels, reflecting greater confidence in their ability to boost sales and expand their market reach.

Which brings us back to investment conferences. That people are gathering together in various locations to discuss investment opportunities indicates positive sentiment, which can only be healthy for the economy.

Ndiritu Muriithi is an economist and partner at Ecocapp Capital.  He is also the chairman of KRA and former governor of Laikipia County. Email: [email protected]