7 June 2014

Kenya: Weaker Shilling Boon for Flower Exporters

Cut flower exporters say the weaker shilling, which has depreciated against the dollar over the past few weeks, will shore up their earnings in the meantime. However, they say the gains are eroded by the higher cost of inputs, which they say are mostly imported.

Flower exporters are also bracing to start paying taxes in Europe from October as hope dwindles on the signing of an Economic Partnership Agreement between the EAC and EU trade blocs.

"What we see is that due to the rigorous processes of having the contentious issues ironed out, four months is just too short a period," an exporter said on Friday.

According to the Kenya Flower Council, taxes on flower exports from Kenya could rise by as much as 16 per cent, making their product uncompetitive.

Kenya is the largest exporter of cut flowers to Europe, followed by Ethiopia, but the value of its exports is likely to be hurt, potentially toppling it from the apex.

Cut flower exports last year decreased to 103,779 tonnes which earned the country Sh55.98 billion, compared to 108,306 tonnes of the commodity exported in 2012, earning Kenya Sh64.96 billion.

Kenya's trade deficit - the difference between value of total imports and exports - narrowed for the second consecutive month in March, according to the latest data from the Kenya National Bureau of Statistics.

Total exports (domestic and re-exports) amounted to Sh48.83 billion in March, rising from Sh42.65 billion in February. The increase helped sustain a narrower deficit than the previous month as imports rose much slower at Sh107.99 billion from Sh107.07 billion in February. The value of imports in March was much less than recorded in January at Sh130.12 billion.

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