Garissa Township Member of Parliament (MP) Aden Duale has put the National Treasury to task over the shortage of US dollars in the local market that has affected the importation of goods into the country.
The Kenya Association of Manufacturers (KAM) in May lamented importers were struggling to get sufficient dollars to purchase of commodities from abroad even as global goods prices shot up due to increasing demand for the US dollar.
The lobby said that it was buying dollars at above Sh120, way above the official exchange rates, signalling the emergence of a parallel market for the currency with exporters and other entities holding dollars reluctant to sell at lower prices.
Kenya is a net importer of goods and heavily relies on imports of fuel, wheat, maize, cooking oil, electronics and machinery to satiate local demand but now the continued dollar shortage is affecting importation of goods leading to price increases.
The Central Bank of Kenya (CBK) dismissed the claim as Governor Patrick Njoroge in May dismissed KAM’s claims, arguing that there was sufficient dollars in the market, and that the local market provides about $2 billion (Sh233 billion) each month compared to a demand of about $100 million (Sh116 billion) by manufacturers.
“The market distributes about $2 billion every month. So if you have somebody who is importing (goods of) about $100 million I think that is nowhere near the $2 billion that we are putting out there,” said Dr Njoroge.
“They should understand that they are small in that sense and go to the market like everyone else. There are no favorites in the market,” he said.
Mr Duale now wants National Treasury Cabinet Secretary Ukur Yatani to explain the dollar shortage arguing that the CS has failed to implement policies addressing Kenya’s widening trade deficit.
“The country has for the last two years faced an economic situation where it lacks a sufficient supply of US dollars to manage its international trade effectively. The country continues to pay out more dollars for its imports than it receives from its exports leading to the shortage,” said the MP.
The MP said the dollar shortage has worsened inflation as manufacturers complain of rising productions costs which they pass on to consumers in the form of higher prices of commodities.
Kenya’s inflation rate hit a 58-month high last month rising to 7.9 percent in June from 7.1 percent in May, the Kenya National Bureau of Statistics (KNBS) reported.
The high inflation rate exceeded the CBK’s target ceiling of 7.5 percent for the first time in almost five years.
