The following report is by Kenyans.co.ke:
Treasury Cabinet Secretary Njuguna Ndung’u on Wednesday told the National Assembly that Kenya is banking on BRICS countries namely; India, China, Saudi Arabia, and Russia together with non-BRIC member Malaysia to end the dollar crisis in the country.
Responding to questions from MPs on the measures his ministry is taking to resolve the shortage in dollar supply, Prof. Njuguna attributed the current dollar crisis in the country to the trade deficit between Kenya and the five countries.
According to the CS, once the 5 countries de-dollarize their economies, Kenya’s economy will start recovering.
Ndung’u told parliamentarians that of the total imports Kenya made in the year up to May 2023, 43.7 per cent were from the five countries.
When questioned how this was affecting trade in Kenya and contributing to the dollar crisis, the CS revealed that the trade imbalance has compounded the foreign exchange issue.
The Treasury CS revealed that these economies account for about 70 percent of Kenya’s trade deficit.
China is a significant trading partner for Kenya, with imports from China making up 19.3% of Kenya’s total imports.
In contrast, Kenya’s exports to China account for only 3.1% of its total goods exports.
Exports to India, China, Saudi Arabia, Russia, and Malaysia accounted for 1.0 per cent, 3.1 per cent, 1.4 per cent, 0.6 per cent, and 0.3 per cent, respectively, in the year to May 2023.
The main products exported to these countries are tea, fruits, vegetables and cut flowers. Fish also accounts for a significant proportion of exports to China.
The CS noted on the imbalance of trade.
The Treasury reports that Kenya primarily imports items such as oil, machinery, transport equipment, and raw materials (ores) from five countries.
How De-Dollarisation Will Help Kenya
The predominant currency for trade with these foreign nations is the US dollar.
Given Kenya’s higher imports compared to exports, it often needs to tap into its limited dollar reserves to cover the trade deficit.
Kenya’s trade deficit with these countries amounted to US$ 11.8 billion and US$ 11 billion in the years to May 2022 and May 2023, respectively. Therefore, domestic demand for US dollars would significantly reduce if de-dollarization in the respective trade partner countries progresses.
Ndung’u explained how de-dollarization would help Kenya’s economy.
If these countries were to adopt a different currency for trade, Kenya could preserve more of its dollar reserves for transactions with Western nations.
This, in turn, will help stabilize the exchange rate of the Kenyan shilling against the dollar.
A stronger shilling against the dollar would also mitigate the growth of informal currency exchange markets, commonly known as black markets.
During a BRICS Summit in South Africa in August, Brazilian President Luiz Inacio Lula da Silva advocated for member countries to explore the creation of a common currency for trade and investment as a means to reduce reliance on the US dollar.
The Kenyan government is optimistic that the economic bloc will take action on this proposal.
AUTHOR COMMENTARY
You may recall in March I reported on a statement from Kenyan President William Ruto, telling investors to start dumping their holdings of U.S. dollars, warning that the markets moving forward were going to be volatile. That post has been one of the most viewed post on The WinePress to date. He said at the time:
We just concluded a market-driven arrangement in our fuel sector that will see Kenya access all our fuel needs on a deferred six-month credit that will eliminate a demand of USD 500 million dollars every month from this market.
I am giving you free advice that those of you who are hoarding dollars you shortly might go into losses. You better do what you must do because this market is going to be different in a couple of weeks.
I am happy that the players in that sector including our banks are coming forward and they are participating and their working with the Central Bank so that we can again take charge of our market so that it is not distorted by brokers.
We have done what we must do as the government to ensure that we ease the burden on people who want to realize their returns in dollars.
Ruto said
Kenya’s struggle is true for other countries right now, and they are sick and tired of the United States’ economic hegemony. The dollar is used a battering ram, a luxury arrogant Americans (including us) take for granted on a daily basis, as the world reserve currency via the petrodollar, because our inflation and interest rates get passed onto everyone else, thereby keeping other economies from growing too much (and if it does start to grow too much the U.S. just bombs the crap out of it, or puts embargos on it and blockades trade routes).
Again, the U.S. dollar will die and become worthless, but not quite yet; but give it some more time and it surely will die.
[7] Who goeth a warfare any time at his own charges? who planteth a vineyard, and eateth not of the fruit thereof? or who feedeth a flock, and eateth not of the milk of the flock? [8] Say I these things as a man? or saith not the law the same also? [9] For it is written in the law of Moses, Thou shalt not muzzle the mouth of the ox that treadeth out the corn. Doth God take care for oxen? [10] Or saith he it altogether for our sakes? For our sakes, no doubt, this is written: that he that ploweth should plow in hope; and that he that thresheth in hope should be partaker of his hope. (1 Corinthians 9:7-10).
The WinePress needs your support! If God has laid it on your heart to want to contribute, please prayerfully consider donating to this ministry. If you cannot gift a monetary donation, then please donate your fervent prayers to keep this ministry going! Thank you and may God bless you.
Bad old arrogant Americans who had little to no say in what their traitorous leaders & Rome did in establishing the dollar as the world currency with Saudi Arabia. Few Americans understood what the world leaders did in their partitioning of Europe & Asia, the erecting of the handy, dandy Iron & Bamboo ‘Curtains’ (like those of the confessional, perhaps?), for the stealthy kill off of ‘hindering’ biblical Christianity, & most believed the rhetoric of being a force for good, serving in WWII willingly against what seemed like an arbitrary evil.
–
Most Americans I know are like most Kenyans & just want to be left alone to live quiet lives, unless you ask an ivy leaguer or listen to the controlled media….or follow the heresies of the prosperity pimps & profit/propheteer witchcrafts, social justice works & ritual religion. Wait til they get a load of how the Dragon runs an economy without even having to pretend to be ‘Christian’ & without being ‘hindered’ even by truth. Rwanda, Uganda, Ethiopia and Egypt have already felt it. Nigeria in the throes.