The revelation that one of Kenya’s biggest edible oil manufacturers has suspended operations due to a biting dollar shortage is the latest indication that all is now well in the currency market. Pwani Oil, the maker of Freshfri and Fry Mate cooking oils, says it cannot source raw materials like palm oil for lack of dollars.
It is our prayer that industrialists do not follow this path given its implication on delivering job cuts in a setting where the economy is yet to recover from Covid-19 economic hardships.
Therefore, a solution or a road map to ease the dollar shortage must be made available.
Central Bank of Kenya governor Patrick Njoroge has scoffed at the firms lamenting over the foreign currency crunch and maintained that there’s sufficient foreign currency to meet demand. He brushed off manufacturers who warned a shortage of dollars is affecting their ability to do business and termed the industrialists a small player in Kenya’s currency market.
The Central Bank insists there is enough to meet all demand on grounds that the economy generates and distributes about $ 2 billion a month. But why are top importers like oil marketers and industrialists struggling to get dollars to meet their bonds?
Industrialists have been warning that the inadequate hard currency is negatively affecting their ability to settle bonds to overseas suppliers promptly. This has been laid bare by Pwani Oil woes.
We are fretful of job losses if the dollar crunch is not addressed soon. We can not afford another trigger to job cuts amid revelations that manufacturers are laying off workers on reduced demand for goods due to sky-high inflation.
Kenya’s inflation hit a 27-month high in May forcing many households, especially in the low-income segment, to reduce their shopping basket in an environment where firms have frozen salaries as they recover from Covid-19 economic hardships.
Therefore, the CBK has a duty and responsibility to probe and punish those in breach if instances of culpability emerge and return the currency market to normalcy. The intervention of the CBK is needed in a situation where the regulator insists there’s sufficient foreign currency while industrialists hold a different view.