Strong Shilling Wipes Out Sh4.5b Export Earnings

By Allan Rotich Posted 04 May 2006 @ 07:21 pm EET     Print     Reprint     E-Mail     Comments

Nairobi (IBTimes.com) - The horticultural industry is facing a loss of Sh4.5 billion this year as a result of a strong shilling. Hasit Shah, the chairman Fresh Produce Exporters Association of Kenya (FPEAK) said the stronger shilling continue to be a major drain on the industry and that the government must find an appropriate way of dealing with it.

He blamed an influx of dollars held locally for relief and reconstruction in southern Sudan and Somalia, remittances by Kenyans, United Nations and Non-Governmental Organisations (NGOs) as reasons behind the surge in the exchange rate. He said the industry was losing Sh9 on every dollar gained from exports as a result of the exchange rate losses.

"We want the Government intervention in the issue and the Central Bank should start by increasing import cover from three to nine months to suck in some of the excess dollars in the market," he said.

Shah was speaking during the Fresh Produce Exporters Association of Kenya 30th annual general meeting in Nairobi. Also present was the Association’s chief executive, Sicily Kariuki. Kenya Association of Manufacturers (KAM), Kenya Flower Council and Fresh Produce Exporters Association of Kenya, have been demanding that exchange rate be stabilised at between Sh76 and Sh78 to the dollar to save exporters from losing their competitive edge.

The exporters said they have been losing Sh15 billion (about 200 million US dollars) annually as a result of stronger shilling and needed to be supported because they faced stiff competition from the region due to rising labuor costs and the ever diminishing preferential market access arrangements.

In a speech delivered earlier, Agriculture minister, Kipruto Arap Kirwa who was the chief guest conceded that the importance and contribution of horticulture to the economic development of the country could not be underestimated.

He decried the decreasing exports of mangoes and avocadoes, saying it had reduced by 40 per cent in the recent past and called for fresh efforts to reverse the trend.

"I challenge FPEAK members to increase the volume of exported horticultural produce of Kenya," Kirwa said in a speech read on his behalf by a Senior Deputy Secretary in charge of horticulture in the ministry, Tom Obonyo.