The Kenya Association of Manufacturers has warned that the ongoing dollar shortage in the country is likely to have a ripple effect on manufacturing and processing value chain
The association says that the shortage poses a serious threat to the sector members who rely on dollars to import key raw materials and inputs for processing and capital goods for investment.
KAM adds that the dollar shortage is affecting the relationship of manufacturers with suppliers and risks destroying Kenya’s reputation as an open market.
“The real market price is now above Shs120 and it is our belief that the differential is contributing to the shortage. Exporters and other entities holding USD are reluctant to sell the dollar at lower prices as it is clear and visible to them what the market value of the currency is,” KAM Chairperson Mucai Kunyiha said in a statement.
Kunyiha said, most of the manufacturers to bought dollars in advance, something that is affecting their operations.
“Manufacturers have been forced to plan for foreign currency payments by purchasing foreign currency in advance resulting in an increase in working,” KAM noted.
KAM wants the Central Bank of Kenya to institute a policy that will return the market to predictability and, crucially , to supplies of currency as and when needed to restore confidence in the market
“This is extremely worrying Kenya has painstakingly built a reputation as an ‘ open market ‘ that has enabled us to trade on favorable terms with the world,” KAM said.