25 April 2022
Nairobi, Kenya
Dollar shortage hits Kenya disrupting manufacturing chain
More on the crisis :
Manufacturers in Kenya are now bracing for the rationing of dollars in financial institutions following a directive by the Central Bank of Kenya (CBK).
CBK had directed financial institutions to ration the purchase of dollars to protect the reserves following a shortage of the US currency.
Foreign intermediary financial institutions such as Jp Morgan had made alerts to their customers in March on the increasing liquidity shortages in Kenya.
“Clients are informed that due to ongoing issues with sourcing sufficient US dollars liquidity in the Kenyan market in recent days, client requests for repatriation of Kenyan shilling via Jp Morgan‘s Auto-X program may be delayed. Liquidity constraints may result in delayed execution and completion of foreign exchange transactions.”Jp Morgan stated.
Financial institutions have also brought up the dividend payout to foreign investors at the Nairobi Security Exchange as a contributor to a liquidity crisis.
A daily cap on dollar purchases has been composed of currency traders and importers by the CBK. The cap is limited to USD 50,000. The cap will require manufacturers to give a two to three-week notice to meet financial obligations according to Mucai Kunyiha, the chairperson of the Kenya Manufacturers Association.
“One USD (dollar) purchase transaction used to take one working day. However, due to the daily cap manufacturers now have to plan 2-3 weeks, depending on the dollar requirements for specific consignments,” Kunyiha stated
Manufacturers and industrialists have been scrambling for dollars in advance. To weather the incoming strain on supplier relations.
Kenya is recovering from the pandemic, the demand for more raw materials and equipment by capital intensive industries which are reliant on imports.
With the shortage of the dollar, foreign suppliers who supply raw materials and equipment will experience delayed payments and consumers will experience a shortage of supply of goods hence raising the cost of living amidst a struggling economy
Source: Pulse
Nairobi, Kenya
Dollar shortage hits Kenya disrupting manufacturing chain
More on the crisis :
Manufacturers in Kenya are now bracing for the rationing of dollars in financial institutions following a directive by the Central Bank of Kenya (CBK).
CBK had directed financial institutions to ration the purchase of dollars to protect the reserves following a shortage of the US currency.
Foreign intermediary financial institutions such as Jp Morgan had made alerts to their customers in March on the increasing liquidity shortages in Kenya.
“Clients are informed that due to ongoing issues with sourcing sufficient US dollars liquidity in the Kenyan market in recent days, client requests for repatriation of Kenyan shilling via Jp Morgan‘s Auto-X program may be delayed. Liquidity constraints may result in delayed execution and completion of foreign exchange transactions.”Jp Morgan stated.
Financial institutions have also brought up the dividend payout to foreign investors at the Nairobi Security Exchange as a contributor to a liquidity crisis.
A daily cap on dollar purchases has been composed of currency traders and importers by the CBK. The cap is limited to USD 50,000. The cap will require manufacturers to give a two to three-week notice to meet financial obligations according to Mucai Kunyiha, the chairperson of the Kenya Manufacturers Association.
“One USD (dollar) purchase transaction used to take one working day. However, due to the daily cap manufacturers now have to plan 2-3 weeks, depending on the dollar requirements for specific consignments,” Kunyiha stated
Manufacturers and industrialists have been scrambling for dollars in advance. To weather the incoming strain on supplier relations.
Kenya is recovering from the pandemic, the demand for more raw materials and equipment by capital intensive industries which are reliant on imports.
With the shortage of the dollar, foreign suppliers who supply raw materials and equipment will experience delayed payments and consumers will experience a shortage of supply of goods hence raising the cost of living amidst a struggling economy
Source: Pulse
