As the Kenyan economy continues to suffer, the import industry is feeling the heat following the tripling of importation costs, mostly from China and Turkey.
Speaking to the press on Tuesday, June 22, NCBA Managing Director John Gachora noted that the transport costs, influenced by the rising fuel prices, had gone up, mounting pressure on the local dollar reserves.
"To get containers from China to Kenya or from Turkey to Kenya, prices have tripled or even more. In some cases, they have gone up four or five times.
"It means that if you are buying the same bag of cement today where you needed to buy it for 10 dollars, you are going to need 20 dollars for the same bag of cement," the financial experts stated.
Gachora further noted that the biting dollar shortage was not a result of a lack of currency within the local reserves but from increased demand by businesses.
He argued that some businesses had created a false demand after requesting dollars of a similar amount from different banks.
"Because of people thinking there are not enough dollars, what we see is traders will go to five or six banks asking for the same thousands of dollars.
"Let's say you want USD 100,000, you go ask one bank for it and then the second and third. By the time you go to five banks, the market thinks you want USD500,000 when you only need USD100,000," he added.
Over the recent months, several companies announced that they were scaling back production after difficulty in accessing the dollars to purchase raw materials.
For instance, Pwani Oil halted its operations after experiencing challenges in importing palm oil crucial in the manufacture of cooking oil and other products.
The Central Bank of Kenya (CBK) Governor Dr Patrick Njoroge however, maintains that the country has a sufficient supply of dollars.
The governor further explained that the country distributes USD2 billion every month which should be able to cover the needs of the manufacturing sector.
Addressing companies that were mulling halting their operations, Njoroge argued that they should comfortably access dollars considering that their needs are far lower than the monthly distribution.
"The market covers a lot. The market generates and distributes something like USD2 billion every month. If you have a sector that is importing USD90 million or USD100 million, I think that is nowhere near the USD2 billion that we are putting out there and they should understand that they are small in that sense and sort of go to the market in that sense," CBK Governor Patrick Njoroge explained on June 7.
