Kenyan exporters are experiencing mixed fortunes from the weakening shilling as the exchange rates remain unpredictable. On one hand their exports are earning highly while trading with the major currencies, the US dollar and Euro. But on the other hand, the weak shilling has led to sharp increase in the price of raw materials which are mainly imported.
Players in the flower, tea and coffee sectors say there is nothing much to celebrate about the situation, particularly in the long term as their short term gains are eroded. “Indeed, with the loss in value of the shilling, exporters are getting more for each dollar they export. This translates to higher Kenya shillings earnings for exporters.
The shilling has declined by about 13 per cent since January a 17 year low of 95 a week ago. However this is a short term gain that is quickly eroded by rising input prices. Growers use imported fertilizers and other agricultural inputs, these input costs are also rising fast and will erode any gains made. Diesel and electricity also make major components of the manufacturing costs.
Jane Ngige, CEO of Kenya Flower Council says a strong Euro is very good for the flower exporters. But the industry purchases most of their inputs in dollar, like chemicals, materials for construction and even the cost of flying the produce is computed in dollars”.
Despite that, it is a low season for the flower sector markets of lower farmers have no room to expand their supply to fully reap from the shilling decline. “The crisis in the euro zone has also created some sort of a depression in Europe; it is a question of being able to balance Euro and the dollar.
The tragedy of our country is that imports outweigh exports. We are also in a disorderly market that is unable to predict when the value of the shilling will come up again, despite oil prices falling sharply, it not easy to know when this will be reflectedlocally.Thismightbejustaoneoff-boomfortheexporters in terms of sales