Overview:
KAM said in a statement that manufacturers had been forced to plan for currency payments by purchasing foreign currency in advance, increasing working capital.
Traders in Kenya have said the severe shortage of the US dollar is crippling the economy.
The Kenya Association of Manufacturers on May 30 said their members, who mainly rely on imported raw materials, cannot access dollars at the official market rates.
As a result, KMA said they are buying a dollar at a rate of Sh120 or higher instead of the usual Shs116.
KAM said in a statement that manufacturers had been forced to plan for currency payments by purchasing foreign currency in advance, increasing working capital as they struggle to obtain sufficient dollars to meet their dollar obligations on time from commercial banks.
“The lack of availability of foreign currency may create a parallel shadow market with unwanted consequences,” KAM said in a statement.
Industrialists reckon the lack of access to adequate hard currency was negatively affecting its members’ ability to settle obligations to overseas suppliers in a timely manner.
It warns the crunch has strained relations with suppliers, at a time competition for raw materials has intensified globally due to rising demand amid lingering supply chain constraints.
But Kenya central bank Governor Patrick Njoroge told reporters last week that the country’s foreign-exchange market generates and distributes about $2 billion a month, which is enough to meet all demand in the economy.
“If you have a sector that is importing $90 million or $100 million, that is nowhere near the $2 billion that we are putting out,” Njoroge said. The manufacturers association “should understand that they’re small, in that sense, and go to the market like everyone else.”