Manufacturers to blame for US dollar drought in the market — Treasury
The prevailing US dollar shortages in the Kenyan market has been caused by manufacturers who are stockpiling the currency in anticipation of a perceived dollar drought.
National Treasury PS Julius Muia has said the availability of dollars should not be a problem at a time when the Central Bank of Kenya is holding foreign currency reserves enough to cover five months of import demand.
The revelations come just days after Pwani Oil, the makers of Fresh Fri, and Salit brands of cooking oil said they are temporarily halting operations due to lack of dollars to source raw materials in the international markets.
“Getting sufficient amount of dollars required to support the factory in terms of getting sufficient raw materials is not happening. We are not even running the plant right now because of lack of raw materials [crude palm oil],” Pwani Oil Commercial Director Rajul Malde said.
“We are competing for the same oil with the rest of the world and, therefore, prices are high. Added to that, we can’t pay on time so we don’t get priority in supply.”
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The roiling crisis has also seen the company notify its customers to purchase its goods in dollars, noting that its bankers were struggling to provide sufficient greenbacks to purchase raw materials in overseas markets.
Last week Central Bank of Kenya Governor Patrick Njoroge Tuesday told off the Kenya Association of Manufacturers (KAM) after the lobby came out protesting at the dollar drought.
The governor held that Kenya’s foreign exchange market transacts about $2 billion of the US currency every month, which was enough to meet demand from importers.
“At the moment, based on the inflows from banks, we are only able to source between $500,000 and $1 million a day against a requirement of $2- $2.5 million a day. So we are only getting half of what we need, sometimes even less than half,” Mr Malde said.
“We humbly request that we bill you in USD and that you pay us in USD so that we can pay our suppliers and keep our raw materials coming,” Pwani Oil wrote in the letter asking clients to pay in the US currency.
