Kenya’s currency market is gripped with a problem of dollar shortages that no one seems keen to address.
Importers, including oil marketers and manufacturers, have raised concerns over the effects of the dollar shortage, including the emergence of a parallel foreign-currency market.
Central Bank of Kenya Governor Patrick Njoroge has maintained that there’s sufficient foreign currency to meet demand.
The central bank insists there is enough to meet all demand in the economy on grounds that the economy generates and distributes about $2 billion a month.
But the big question is why top importers like oil marketers and industrialists are struggling to get the greenback to meet their obligations.
The Kenya Association of Manufacturers (KAM), an industry lobby group, said importers are struggling to import raw materials because they can’t access dollars at the official rate of about Sh116 per dollar, forcing them to buy at a rate of Sh120 or higher.
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.
The shortage highlighted by the KAM is one that other economies in Africa are facing. A similar issue in Malawi forced the central bank to devalue its currency by 25 percent this month.
It is a clear statement of a breakdown in Kenya’s foreign exchange market amid fears of dollar hoarding.
We cannot afford to bury our heads in the sand and assume all is well.
Therefore, the CBK has a duty and responsibility to probe, punish those in breach if instances of culpability emerge and return the market to normalcy.
A solution or a road map to ease the dollar shortage must be made available.
We agree with an earlier statement from the bankers’ lobby that the regulator needs to be involved and ensure that the market is supplied with dollars.