Pwani oil announced on Monday it would temporarily shut its Kilifi plant, a decision that has been compounded by “challenges faced in accessing dollars”.
Pwani Oil, the manufacturer of Freshfri, Salit, and Fry Mate cooking oils, said the decision was based on a shortage of raw materials which it blamed on difficulties accessing dollars to pay suppliers on time.
“Given the prevailing challenges, Pwani Oil has temporarily halted operations at its refinery in Kilifi as we work to resolve the problem. We however wish to assure our customers, employees, suppliers, partners, and other stakeholders that this is a temporary measure and that the business remains in operation and our products available in retail outlets,” Commercial Director Rajul Malde said in a statement.
End of May, the Kenya Association of Manufacturers (KAM) had called on the central bank to ensure sufficient dollars in the market to meet demand in “a timely manner”.
The lobby group through its chair had said the mismatch between dollar demand and supply has persisted for months.
“This situation, compounded with the global challenges we are all facing, calls on the central bank and the Monetary Policy Committee to propose and implement policy actions that will return the market to predictability and, crucially, to supplies of currency as and when needed in order to restore confidence in the market,” KAM chairman Mucai Kunyiha had said.
A survey by the Central Bank of Kenya (CBK) in May shows that chief executives continue to be concerned about increased political uncertainty in the run-up to the 2022 elections.
“Respondents are also concerned about the business environment/ cost of doing business and the economic environment. On the latter, firms are particularly concerned about the stability of the Kenyan Shilling and inflation,” the report says.
However, Dr. Patrick Njoroge, the CBK Governor during the Post MPC meeting rubbished the claims and said the foreign exchange market has enough dollars to meet demand from importers and corporates.
“The [forex] market generates and distributes something like $2 billion every month. So if you have somebody or a sector which is importing $90 million or $100 million, I think that’s nowhere near the $2 billion that we are putting out there.”
“They should understand that they are small in that sense and sort of go to the market like everyone else. There are no favourites in the market. Follow the rules of the market and everything will be okay.”
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