Kenya’s fragile economy hit hard as June 25 protests disrupt trade

Kenya witnessed a nationwide protest on Wednesday that has aggravated economic headwinds already affecting the country, with experts warning that new disruptions may further erode business confidence and growth. 

Wednesday’s protests, which turned confrontational in urban centres including Nairobi, Mombasa, and Nakuru, disrupted commerce and logistics and heightened perceptions of economic instability. Businesses across retail, transport, and services were forced to suspend operations, intensifying pressure on a recovery already under strain. 

Even before the protests, the Kenyan private sector was showing signs of softening. According to Stanbic Bank’s Purchasing Managers’ Index (PMI), activity fell into contraction in May, with a reading of 49.6, its first dip in eight months. The decline was attributed to weak demand and rising costs impacting consumer confidence and business operations ([stanbicbank.co.ke][1]). 

As the June data is pending, it is very likely to show a sharper slowdown due to the unrest—May’s downturn reflected underlying fragility. For investors, this raises concerns that new disruptions could further depress indicators such as output, new orders, hiring, and credit uptake. 

Transport delays following blocked highways in Nairobi and Mombasa complicated supply chains and glutted perishable goods markets. Retailers in key shopping districts reported diminished foot traffic, destruction, or looting of goods, worsening losses among small and mid-sized operators. 

Moreover, the tourism and hospitality sectors face renewed setbacks as they are still recovering from COVID-19.

No mass cancellations have yet been confirmed, as travel advisories citing security concerns could affect bookings in the short term. 

Foreign exchange and bond markets reacted cautiously. The Kenyan shilling, already under pressure, weakened further in intraday trading. At the Nairobi Securities Exchange, investor activity slowed down, with some funds postponing portfolio adjustments pending clarity on the political and economic outlook. 

Analysts at global investment firms caution that repeat disruptions could drive investors to rethink initial commitments in Kenyan equities and bonds. Although East Africa remains a high-growth region, perceptions of unpredictability can swiftly tarnish its attractiveness. 

Kenya’s projected 2025 GDP growth of around 5% is now under threat if protests persist. A transparent government response will be key to restoring confidence. Business associations such as KEPSA and the Federation of Kenyan Employers are calling for inclusive consultations to manage both public discontent and investor anxiety. 

For now, Kenya faces a test of economic resilience: whether policy action, communication, and calm can reverse deepening sentiment. They may determine whether 2025 remains a year of growth or stagnation.