Traders in Kenya have been feeling the pinch of dollar shortage in the country, which has seen exchange rates increase up to Ksh120 per dollar against the quoted rate of Ksh116.
The Kenya Association of Manufacturers, a week ago, expressed concerns over the dollar shortage, saying their members, who mainly rely on imported raw materials, cannot access dollars at the official market rates.
According to Central Bank of Kenya Governor, Dr Patrick Njoroge, there was rising demand for dollars about two months ago, which has since “normalized”. He however dismissed claims the country is not experiencing a dollar shortage.
Dr Njoroge maintained the foreign exchange market transacts about $2 billion of the US currency every month, which he indicated was enough to meet demand from importers and companies for payments like dividends.
Pwani Oil shuts plant, blames lack of dollars
CBK’s position on the dollar shortage issue is however coming into question after Pwani Oil, the Mombasa based company that produces the Fresh Fry, Salit and Fry Mate cooking oils announced closure of it’s plant on Monday due to “shortage of dollars”.
According to the company, the shortage of dollars has pushed production costs up and made it difficult to source raw materials and pay suppliers.
“Getting sufficient amount of dollars required to support the factory in terms of getting sufficient raw materials is not happening”
.….We are competing for the same oil with the rest of the world and, therefore, prices are high. We can’t pay on time so we don’t get priority in supply.” Commercial Director Rajul Malde told Business Daily.
Prices of cooking oil have doubled in the country in the last two months as the Russia-Ukraine war’s continues to impact economies across the globe and the recent development in Kenya is bound to push the prices even higher.