NAIROBI, Feb. 21 (Xinhuanet) -- The strong Kenyan
currency shilling is threatening the survival of local manufacturers and farm
produce exporters, industrialists complained here Tuesday.
Addressing a news conference in Nairobi, the exporters said they have already incurred heavy losses and
diminished competitiveness in the international market and called on the Central
Bank of Kenya (CBK) to intervene to save the economy, which is export oriented,
from suffering further shocks.
The Kenya Association of Manufacturers (KAM), Kenya
Flower Council and Fresh Produce Exporters Association of Kenya, led the
onslaught on CBK Governor Andrew Mullei with an express demand that the exchange
rate be stabilized at between 76 and 78 to the dollar to save locally
manufactured goods from losing their competitive edge in regional market.
"We expect to see more proactive action on the part
of the Ministry of Finance and CBK maintaining predictable trends in the
exchange rate," said Erustus Mureithi, the chairman of the Kenya Flower Council.
"The government has the instruments and power to
ensure that the shilling supports its overall policy of deepening export
oriented domestic production. We propose that the government move expeditiously
to ensure that the exchange rate upholds with this broad economic objective,"
KAM Chief Executive Betty Maina said industrialists
were alarmed by the apparent apathy of the central bank in dealing withthe
exchange rate dilemma.
"Some of the exporters are already relocating to
neighboring countries due to strong shilling and also because the cost of
production is low. We want a predictable policy on exchange rate so that we are
able to plan," said Maina.
Kenyan exporters have been putting pressure on the
central bankto intervene and weaken the shilling to a range of between 76 and 78
to the dollar. But Mullei has said the bank had to balance the interests of
exporters and importers.
The exporters said they have been losing 15 billion
shillings (about 200 million U.S. dollars) annually as a result of stronger
shilling and needed to be supported because they faced stiff competition from
the region due to rising labor costs and diminishing preferential market access
They blamed an influx of dollars held locally for
relief and reconstruction projects in southern Sudan and Somalia as reasons
behind the recent surge in the exchange rate.
Last month, Trade and Industry Minister Mukhisa
Kituyi expressed concern over the stronger shilling, saying it was hurting the
Echoing calls by the country's exporters for a weaker
shilling,Kituyi called on the ministry of finance to intervene and devalue the
"The stronger shilling is hurting the export sector.
I have raised this concern with relevant authorities that something has to be
done to the strong shilling," Kituyi said.
Saying he had raised the matter at the highest level,
the minister claimed appreciation of the currency had left one third of
horticulture and flower exporters struggling and reduced margins in key sectors
such as textiles.
On Tuesday, the Tea Board of Kenya said the combined
effect of the drought and the appreciation of the shilling are expected to cost
the country about 8 billion shillings (about 115 million dollars) in lost