The Kenya Association of Manufacturers (KAM) has sounded the alarm on the country's dollar shortage, warning it poses a serious threat to the manufacturing sector.
The crisis, KAM says, is affecting the relationship of manufacturers with suppliers and risks destroying Kenya's reputation as an open market.
According to KAM, most of its members are accessing the exchange rate at Sh 120 above the formally quoted exchange rate of around Shs115-116.
"The real market price (as evidenced in our purchases) is now above Shs120 and it is our belief that the differential is contributing to the shortage," KAM Chairperson Mucai Kunyiha said in a statement.
Manufacturers have been forced to plan for foreign currency payments by purchasing foreign currency in advance, resulting in an increase in working capital.
Delays in acquiring the requisite USD for imports are impacting relations with suppliers, with some now requiring more expensive Letters of Credit to transact.
"In the most extreme cases, supplies have been cut or delayed as credit limits from the manufacturers' suppliers have been breached," KAM noted.
KAM has urged the Central Bank of Kenya to institute a policy that will return the market to predictability and ensure supplies of currency as and when needed.
