Absa Bank, Kenya Flower Council and Fresh Produce Consortium of Kenya have signed a hedging deal to cushion horticultural exporters from the dollar fluctuations.
The agreement, will hasten the clearance process of fresh produce exporters in the horticulture and floriculture industry that have been experiencing delays due to fluctuations of the Kenya Shilling against the green buck.
Dollar hedging is an attempt to reduce the effects of currency fluctuations on investment performance.
Absa Bank Kenya Head of Global Markets Stella Mambo told The Star that the new risk management strategy will be open to commercial clients, SMEs, retailers, individuals and corporate clients.
“It’s a programme to hedge your risk we first have to know which risk you’re carrying, then we help them come up with a hedge policy, then come up with the right framework to put in place,” said Mambo.
The move comes at a time that the dollar hit an all record high of Sh135.
Firms rely on forex to settle external transactions such as making imports, paying workers, and settling foreign currency-denominated loans
Last week a ship left behind 77 containers of avocados that were destined for the European Union and Middle East markets due to exportation challenges.
The containers, which usually leave Mombasa port every Thursday, were destined for European Union and Middle East countries.
Kenya has been enjoying increased horticulture export post Covid-19 with The Economic Survey 2022 showing that the value of horticulture exports increased from Sh150.2 billion in 2020, to Sh157.7 billion in 2021.
During the review period, horticultural output; key among them the cut flowers, benefitted from better export prices offered in the export market.
Fresh Produce Consortium (FPC) of Kenya chief executive officer Okisegere Ojepat wh was speaking during the Agri-Horti Sector Forum in Nairobi said The role of financial institutions in agricultural sector cannot be downplayed as it's crucial in addressing the needs of the farmers and stakeholders within the agribusiness space.
