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Massive job losses loom in Kenya as US Dollar shortages persist

Published

3 years ago

June 8, 2022

Workers in the private sector in Kenya are on the verge of losing their jobs following an acute shortage of the dollar which could trigger manufacturing firms to shut down or suspend operations as they try to navigate cash flow problems.

The fears were raised barely a week after the Kenya Association of Manufacturers (KAM) warned that most of its members are facing challenges accessing the dollar.

According to the KAM, firms like Pwani Oil, the manufacturer behind the Salit Oil, Mpishi Poa, and Fresh Fry cooking oil products, has announced a temporary halt of its operations, citing dollar shortage which has hindered it from sourcing key commodities.

KAM Chairperson Mucai Kunyiha on May 30, had said manufacturers have been forced to plan for foreign currency payments by purchasing foreign currency in advance resulting in an increase in working capital.

A foremost Kenyan economist, Ken Gichinfa who spoke on a radio programme on Wednesday, said with sufficient dollars in reserves, the shortage is being occasioned by pent-up demand for the dollars which has led to the depreciation of the Kenyan shilling.

“The worst-case scenario is that many firms will shut down resulting in job losses escalating due to manufacturers struggling to meet their obligations.

“If the situation remains unresolved, the business community involved with importation, like manufacturers and car dealers, will be largely affected and might lead to further closure and job losses,” Gichinga said.

But in response to the fears, the Kenyan Central Bank (CBK) accused the manufacturers of causing the scarcity of the dollars.

“The manufacturers should understand that they are small in that sense and sort of go to the market like everyone else. There are no favorites in the market. Follow the rules of the market and everything will be okay,” the CBK head, Patrick Ngugi Njoroge had previously remarked.

Kenya is already battling rising inflation which has heightened the cost of living with fuel and food prices rising.

The costs of producing goods and services remained at an 8-year high driven by rising fuel prices, higher taxes, and input shortages which forced many firms to scale back on output and employment levels.

Related Topics:Dollars Economy Featured Kenya

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Moroccan annual inflation rises to 0.8% in November

Published

1 day ago

December 21, 2024

Ifeoluwa Dada

Morocco’s statistics office has confirmed that the country’s annual inflation rate, as determined by the consumer price index, increased from 0.7% in October to 0.8% in November.

Monthly, consumer prices decreased by 0.2% from October.

The primary driver of inflation, food costs, grew by 0.8% compared to the previous year, while non-food inflation climbed by 0.7%. Core inflation, which does not include more erratic items like food, increased 2.6% annually and 0.2% monthly.

According to the central bank, inflation is expected to average 1% this year, down from 6.1% last year.

Despite the Al-Haouz earthquake, a spike in inflation, and worldwide economic challenges, Morocco’s GDP grew by 3.4% in 2023.

A recovery in tourism, robust industrial exports, and rising private consumption—all bolstered by prudent macroeconomic policies—were the main drivers of growth.

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Nigeria’s $42bn foreign reserves enough for 9 months’ imports— Central Bank

Published

2 days ago

December 20, 2024

Ifeoluwa Dada

According to Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), the nation’s $42.01 billion in foreign reserves can cover imports of goods and services for almost nine months.

Cardoso promised Nigerians improved economic fortunes in 2025 while addressing the Senate Committee on Banking, Insurance, and Other Financial Institutions yesterday in Abuja at the presentation of the performance index report.

Cardoso stated: “External Reserves rose from $ 38.35 billion it was on September 30, 2024, to $ 42.01 billion as of December 12, 2024”.

He clarified that third-party receipts in Q3 2024 and revenues from taxes connected to crude oil were the main drivers of the rise in foreign reserves during the specified time.

“We saw remarkable improvements in our trade balance and maintained a current account surplus,” he added.

“Our external reserves level can finance over 9.09 months of import of goods and services or 13.91 months only, higher than the international benchmark of 3.0 months and a robust buffer against shocks”.

On cash shortage, the CBN boss reiterated the N150 million fine against any branch of banks caught illegally distributing new Naira notes to currency hawkers and unscrupulous elements and said the Nigerian economy will improve in 2025 through policies and measures.

He predicted a stronger economic future: “Despite our economy’s challenges, there are clear reasons for optimism.

“The gradual stabilization of the forex market, ongoing banking sector recapitalization, and positive growth trends in key sectors, especially the services sector, indicate a path toward recovery and stability.”