The Central Bank of Kenya (CBK) has issued a response following the shut down of cooking oil manufacturer, Pwani Oil, over a shortage in dollars from the Kenyan reserves.
Speaking to the press on Tuesday, June 7, Central Bank Governor, Patrick Njoroge, maintained that the country has enough dollars in its reserve.
The banker further explained that the country distributes USD2 billion every month which should be able to cover the needs of the manufacturing sector.
Addressing companies that were mulling halting their operations, Njoroge argued that they should comfortably access dollars considering that their needs are far lower than the monthly dollar distribution.
Cooking oil products on sale.
File “The market covers a lot. The market generates and distributes something like USD2 billion every month.
“If you have a sector that is importing USD90 million or USD100 million, I think that is nowhere near the USD2 billion that we are putting out there and they should understand that they are small in that sense and sort of go to the market in that sense,” explained Njoroge.
His response comes just a day after Pwani Oil, which is anchored in Kilifi county, announced that it was temporarily shutting down its operations.
In a letter, the company argued that it was affected by severe negative impacts on global supply chains and faced challenges in its attempt to access US dollars from the reserves to pay for raw materials abroad.
The supply chain woes were expounded by the ongoing conflict between Ukraine and Russia – one that has made neighbouring countries such as Indonesia ban exports of food commodities.
“The global supply chains have been severely impacted by the ongoing conflict in Ukraine. In addition, some countries like Indonesia have suspended exports of crucial commodities like palm oil.
“Manufacturers here in Kenya have not been spared the aftershocks of this unprecedented disruption, coming in the wake of the prolonged Covid-19 crisis. Locally, the situation has been compounded by challenges faced by manufacturers in accessing US dollars used in paying for imports of crucial raw materials,” read Pwani Oil statement in part.
Kapa Oil, which is also a major player in cooking oil and detergents manufacturing, is also operating below its capacity owing to the dollar shortage. The company is known for manufacturing Rina cooking oil and Toss detergents.
CBK Governor Patrick Njoroge during the May MPC Conference. PHOTO: TWITTER