Small businesses have been on the receiving end in the ongoing shortage of dollars, with prices for goods rising as the ability to import goes down.
Traders in Nairobi’s Kamukunji market, who mainly import household items, have told the Nation that the scarcity has seen banks limit the amount of dollars they can access, a situation that has seen them experience delays when importing goods, as well as sourcing them at higher prices.
Mr Muturi Kariuki, a representative of the Kamukunji traders, said several banks were limiting access to dollars by different amounts, citing two local banks for allowing a maximum of $25,000 and $50,000 by last week.
“This situation has affected our businesses because traders always contribute money and put it together so as to afford importing in bulk as a group, but now the limitations have made it difficult to access enough dollars as we require,” the trader said.
While most traders usually join hands by pooling resources together to be able to import goods in bulk, the dollar shortage has triggered a rise in prices and consequently, prices for importing goods, with the average price for commodities increasing by 20 per cent.
Unable to import
At the market, many traders are unable to import as they did before, with volumes of goods coming in having gone down from about four containers weekly, to about three containers monthly.
“There are many traders who have stopped importing and are instead buying the commodities locally, particularly the smaller ones who cannot afford importing in bulk. We are being wiped out from the market we have built for many years,” Mr Kariuki said.
Mr John Gachora, the Kenya Bankers Association chairman, however, blames increased prices for commodities globally on the high demand for dollars, stating that it has seen demand for the currency overtake its supply in the market, creating unnecessary tension.
“The volume of dollars that we are getting today is the highest we have received. We are seeing dollar volumes growing. But if you look in the international markets, prices for commodities have, for the most part, risen — in some cases, more than doubled. Prices for transportation of containers to Kenya from China have tripled, or even more.
Cost of items
“The demand for dollars has risen primarily because of the cost of items that we are buying as a country. That means that if you are buying a bag of cement today, while it may have cost $10 previously, you need $20 today,” he said.
The banker, however, said some clients who have been approaching several banks with requests to have the same amount of dollars have ended up creating a notion that has exaggerated the magnitude of scarcity for the currency.
Mr Gachora asked traders to approach one particular bank with their request and let the bank do the sourcing for the dollars.
“If you know you need $100,000 next month, go to your bank today so that it starts doing purchases. The sentiment needs to change, because actually we are able to fill the dollars that people need. It’s just taking a bit longer,” he said.
He also admitted that due to the notion that there has been a shortage, pricing of the currency has widened.
“Kenya continues to trade. However, there is that supply gap between what we are receiving and the demand on a daily basis,” he said.