The Central Bank of Kenya (CBK) has ordered commercial banks in the country to ration dollars following a shortage of the US currency.
This comes weeks after revelations that Kenya was facing a US dollar crisis. For weeks now, businessmen in the country have been unable to access dollars from local banks to fund their imports.
According to the Kenya Association of Manufacturers (KAM), the lack of access to hard currency is negatively affecting their ability to settle obligations to overseas suppliers in a timely manner.
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KAM says that this has strained relations with suppliers, at a time competition for raw materials has intensified globally due to rising demand amid lingering supply chain constraints. JP Morgan has also issued a client alert saying that that it has been facing troubles in finalizing client transactions in Kenya due to dollar shortage in Kenya
As this shortage deepens, currency traders and importers say banks have started to impose a daily cap on dollar purchases as firms struggle to obtain adequate forex.
Local business newspaper, Business Daily, quoted a top CEO of an industrial conglomerate in three high-capital intensive industries, including cement manufacturing, saying that his business has been restricted to a daily cap of $50,000 (about Sh. 5.78 million).
Further, according to KAM, one USD (dollar) purchase transaction used to take one working day. However, due to the daily cap manufacturers now have to plan 2-3 weeks in advance.
