Kenyan manufacturers have started feeling the negative effects of the current shortage of dollars as Pwani Oil, one of the leading vegetable oil producers temporarily shuts down.
Pwani Oil shuts downs cooking oil plants
Pwani Oil is the manufacturer of Freshfri, Salit and Fry Mate cooking oils.
Pwani Oil is the manufacturer of Freshfri, Salit and Fry Mate cooking oils in the country.
The company has cited a shortage of raw materials caused by an acute challenge in accessing dollars to pay suppliers on time.
“Getting sufficient amount of dollars required to support the factory in terms of getting sufficient raw materials is not happening. We are not even running the plant right now because of lack of raw materials (crude palm oil),” Pwani Oil Commercial Director Rajul Malde told Business Daily.
“We are competing for the same oil with the rest of the world and, therefore, prices are high. Added to that, we can’t pay on time so we don’t get priority in supply,” he added.
The Kenya Association of Manufacturers has been trying to get the Central Bank of Kenya to intervene in the shortage of dollars.
However, CBK Governor Patrick Njoroge insisted that there was sufficient demand and supply for the dollar.
KAM had raised concerns that the shortage had resulted in the emergence of a parallel exchange rate as banks take advantage to increase the exchange rates.
The association argued that its members who are the biggest importers of goods were buying the dollar at more than Sh120 compared to the Central Bank’s official exchange rate of 116.81 units as of end of May.
“The situation can only improve if the dollar situation improves. And I am not seeing the dollar situation improving on its own without the central bank intervening and releasing some of the dollar reserves that they are holding to stabilise the dollar demand in Kenya,” Malde said.
“We are expecting one consignment [of palm oil] in the middle of this month and then after that, there’s no more supply until the end of July. The one that is coming next month is dependent on dollar availability—whether we will be able to pay to release that cargo,” the Pwani Oil Commercial Director added.
KAM reported in April that banks had imposed dollar purchase limits, making it impossible to get sufficient cash to fulfill supplier obligations.
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