ADDED COST

Weak Kenya shilling pushes up cost of imports from Uganda and Tanzania

Kenya shilling weakens against EAC currecies.

In Summary
  • On Wednesday, the Kenyan shilling was bought at 20.75 units against the Tanzanian shilling compared to the pre-Covid 19 rates of above 22.
  • Nairobi majorly buys foodstuffs, especially cereals, and electricity from the west-neighboring country, its biggest trading partner.
Bales of mitumba/FILE
Bales of mitumba/FILE
Image: FILE

Kenyan traders sourcing goods from Uganda and Tanzania are now forced to pay more on weakening shilling that has depreciated by 20% against regional currencies. 

On Wednesday, the Kenyan shilling was bought at 20.75 units against the Tanzanian shilling compared to the pre-Covid 19 rate of above 22.

The Kenyan shilling exchanged at 32.98 yesterday against the Uganda shilling compared to Sh34 in March before the local currency started to tumble. 

 
 

Speaking to the Star on phone, Ruth Akinyi who has been buying clothing materials from Tanzania for resell in Kisumu and Nairobi said that the weak shilling is hurting her. 

"The weak shilling and increased logistics costs due to Covid-19 are taking a huge toll on my business," she said.

She explained that she used to buy a bale of Cotton African Kitenge Fabric containing 50-60 pieces at a wholesale price of Sh35,000 in March when the shilling was going for 22 units.

Today, the same is now going for Sh38,000 to Sh40,000, with the shilling devaluation accounting for almost Sh2,000 per bale.

''This has forced me to adjust my sale prices, with each Kitenge fabric measuring 5.5 metres square now going for Sh1,500 up from Sh1,300.  The price increase and revenue shortfall for most families have seen business stall,''Akinyi said. 

She is worried that the texture and patterns of her current stock will be overtaken by time, leading to losses.

''The apparel industry evolves very fast. I was hoping to finalise stock by October but this may not happen as most families have redirected budget to essential goods, especially food,'' Akinyi said. 

 
 

Her colleague Jane Awiti shuttles between Uganda and Tanzania to buy grains is worried that the sliding shilling might see her trade locally. 

''The weak shilling is slashing my profit margin on every bag of maize and beans I buy in Tanzania. Why should I buy a bag of maize for Sh2,000 and sell at Sh2,200? I better source from Eldoret and Kitale and save on logistics costs,'' Awiti said. 

Kenya largely imports wheat, textiles and clothing, hides and skin, oilseeds, vegetables, rice, paper and paperboard, footwear, wood, plastic and rubber, among other products from Tanzania. 

Nairobi majorly buys foodstuffs, especially cereals, and electricity from the west-neighbouring country, its biggest trading partner.

The shilling has in the past eight months lost ground against international currencies, a move that is likely to see a hike in prices for most commodities in the import-dependent nation. 

Yesterday, the shilling sunk to a new low of 111.51 against the US dollar as demand by importers heightened as they stocked for Christmas festivities. 

Besides pushing up the cost of living, the weak shilling is likely to pile pressure on the country's external debt which is largely denominated in the greenback. 

It is also expected to hurt the country's foreign direct investment as the cost of doing business soars.