FINANCE minister Njeru Githae says Treasury will identify the unnecessary import items in a bid to seek for alternatives or reduction in the importation of such as a long term measure of supporting the shilling.
Decrying the country's increasing current account deficit, Githae noted that Kenya was importing some "completely unnecessary items" that are piling pressure on the local currency. "The only items we should be importing are those like fuel and capital items like machinery...there is absolutely no reason why we should import things like clothes...we will look at working with manufacturers to come up with a solution for this," Githae said.
The finance minister also noted that the shilling's recent slide in value to the dollar was expected since it has been the trend every May. May is the period when most companies pay their foreign shareholders dividends which is mostly done in dollars thereby increasing their demand, he explained. He also attributed the shilling's slide to decreasing interest rates after most international speculators who had injected capital locally to benefit from the high rates started pulling out from the market.
The shilling has lost 0.8 per cent value to the dollar since the beginning of the year. Yesterday it stood at 85.75 to the dollar. Githae was speaking during the opening of payments technology firm Visa International's regional office in Nairobi. The Nairobi headquarters will serve 19 markets in Eastern, Central and Southern Africa.
According to Visa group president of Elizabeth Buse, there are currently five million visa card users in Kenya most of them with debit cards and only 200,000 out of these use credit cards. "Some of the challenges that we face in emerging markets are like lack of proper infrastructure and the large number of people who do not have access to traditional financial institutions," noted Buse.
She added that mobile money transfer which is common in Kenya posed a challenge and that Visa had sought for a local presence to deal with such competition through various partnerships with banks, government entities and other service providers. "The region's rising level of trade is driving economic development competitiveness," Buse said.