“It is definitely a blow to us considering how weak the shilling is against the dollar yet all our imports are paid in dollars,” says Mr. Bas Smit of Kreative Roses Ltd. Adding, ‘this has come at a time we were just recovering from losses suffered after a three-month delay in signing new trade deals – Economic Partnership Agreements- with the EU which placed the country into a higher tax bracket’’.

Traders attribute the decline to political upheavals in the Eurozone that have resulted in the currency also touching an 11-year lowagainst the US dollar.

“The Euro has not been doing well due to political uncertainties in Russia and the Greece situation thus attention has shifted to the US, which seems to be doing well as reflected in its currency,” a financial analyst said.

In addition, the economic crisis in Russia has thrown the market into turmoil. Ecuadorian flower exports bound for that destination were re-destined to Europe flooding the market hence a price drop of between 8% to 15%. For growers who could not send more volumes into the market, it was a double blow. ‘’Valentine is the only time we manage to maximize our sales so it was a double tragedy’’, says a grower. However, the market showed a slight recovery in the last days of valentine sales with Russian buyers getting active. ‘’We saw Ecuadorian growers buying Kenyan flowers to service their Russian contracts”, says Mr. Smit. Asked about mothers day, he said, ‘’Well it is still early for market trends change but going by the current situation, it will still be average’’.

In Summary

  • Central Bank of Kenya quoted the shilling at Sh103.8 to the Euro, a sharp drop from Sh120.4 recorded at the beginning of July 2014. The euro last dropped to these levels in mid-2012 when in touched Sh103.
  • Kenyan exports to Europe comprise mostly agricultural products including tea, coffee, fresh fruits and vegetables as well as cut flowers.
  • A weak euro means fewer shillings for each euro exchanged thus dealing a double blow to exporters to Europe, as they invoice their produce in euros but procure their inputs in dollars.
  • The dollar has, on the other hand, been firming up against the Kenya shilling to touch Sh91.7, piling pressure on an import-dependent economy as importers have to folk out more shillings for a dollar.