How reduction of imports will curb dollar shortage

NAIROBI, DEC 18 – Dollar shortage has been experienced in Kenya for months. President William Ruto now says that too much imports partly explains why there is a shortage. Ruto says his administration has deployed several means to curb dollars shortage including government-to-government oil deal and increasing  remittances by exporting labor.

According to him one government-to-government deal is not the only way to fix exchange but rather one of the many ways. While addressing the comparison often made between Kenya and its neighbors, Ruto says that Kenya’s economy is different from that of Uganda and Tanzania in that Kenya is a middle income country and the said neighbour are not.

Government-to-government deal

Ruto: “The government-to-government deal is not the only thing that will fix the exchange rate, it is one of the many things. We are a different economy from Uganda and Tanzania. We import much more for our industries because we are a different economy for all our other services than Uganda and Tanzania does. We are not in the same category economy-wise. We are a middle income economy, they are in a different economy not like us. So you cannot compare them and us.”

Reducing Imports

Kenya spends billions of shillings every year to import commodities. Ruto says there are goods that Kenya should not be importing since the country has the ability to produce them. These include food items, wood products and steel. 

Ruto: “There are things we are importing today which we should not be importing. We shouldn’t be importing cement, steel and furniture. We are spending huge amounts of money to import when we can manufacture them locally. That is the reason why we have put a levy on the import of these unnecessary imports to Kenya so that we can stem the export of our foreign currency and manufacture those items locally.” 

He continued: “We are importing Ksh500 billion of food items, from edible oils to maize to rice. Uganda and Tanzania does not import that much food. We are the only country that import that much food because we haven’t paid much attention to agriculture.”

Kenya’s agricultural potential

The president says that the country has to pay attention to agriculture so as to reduce spending on importing food items. He says Kenya has 15% of its land being arable compared to Uganda, 80% and Tanzania which has about 60% arable land. 

Ruto: “We need to understand, while Uganda, 80% is arable with rain, Kenya, only 15% is arable with rain. Tanzania is a completely different story almost 60% of their land has rain and is arable. That is why we are importing $500 million of food into Kenya. So what do we need to do, we need to pay attention to pay agriculture. That is why in the manifesto I sold to the people of Kenya, agriculture modernization, mechanization is one of the big tickets that I said I am going to do.”

He further pointed out that subsidization of  farm inputs like fertilizers where the cost of 50-kg bag now retails at Ksh2,500 down from Ksh7,00. According to him, this interventions enabled the country to produce 61 million bags of maize up from 44 million bags last year.

Increasing Remittances

The president also beliefs that increasing remittances from USD 4 billion to USD 1O billion will help curb the dollar shortage. Through his foreign trips, he says he has signed several deals with foreign countries to export labor. He also beliefs that connecting Kenyans to work online for foreign companies will bring more foreign income. 

“I made a commitment in our plan that we are going to increase the remittances from $4 billion to $10 billion. I have signed bilateral labor agreements with Saudi Arabia, UAE, Germany, Canada and many other countries we are exploring possibilities,” Ruto says.