Weak shilling erodes gains from exports

“The decrease in the value of merchandise imported during the period was mainly due to the oil import bill falling to $2,266 million from $2,837 million due to low oil prices in the international market compared with a similar period in 2009. In addition, import bills for machinery and transport equipment declined to $2,995 million from $3,179 million during this period,” says CBK.

But the weakening of the shilling is likely to reverse the gains made so far as it will require more local units to purchase the same dollar bills to pay for the capital goods and intermediate material for the final production of commodities.

The ongoing recovery of the economy and the expectation of a wider market following the start of the East African Common Market Protocol will create room for businesses to increase their capex to meet the growing demand for commodities.

Analysts see the expanded EAC market as the best chance for Kenya to grow its exports as it boast of a more advanced manufacturing sector, a superior service industry and well endowed human resource.

On the flipside, a weaker shilling will present fresh opportunities for the country ‘s main export commodities as they will fetch better prices.