Clothing industry affected by poor performance of shilling

Clothing industry affected by poor performance of shilling

The shilling which has been facing mixed performance since last year but the past four months the shilling has been weakening against major currencies to affect the Kenyan economy, thus raising the standards of living among Kenyans. The weakening shilling against the major currencies has affected the Agricultural sector, which has consequently affected cotton farming in the country.

Even with the low tariff rates on imports into Kenya, the cost of importing has gone up which consequently leads to the consumer spending less on clothes and more on the basic needs. A major trading partner with Kenya in the clothing industry is United States of America especially after signing the African Growth and Opportunities Act (AGOA) agreement in 2001. A second hand customer in Nairobi, Emily Njuguna says that the price of mitumba clothes and shoes has been increasing since the beginning of the year.

Late last year the shilling had mixed performance and has been falling especially in March this year, with the economic inflation and political atmosphere in the country. In January 27, 2011, the shilling closed the week trading at Ksh 81.01 while appreciated against the Sterling Pound to trade at Ksh 128.99. The lowest moment so far was when the shilling traded at over Ksh 85 in March. Central Bank of Kenya came in to curb the inflation to 6% in March which would have hit almost if they did not intervene. The rate was lowered from February’s 6.5%.

The sector is optimistic be a major player in the economy after the government doubled producer prices from Ksh 32 per kilogram to Ksh 65 per kilograms to show that the sector is beginning to attract attention: but with the fuel prices going up and the current drought in the country.

Going by the trade report by the United States of America census Bureau, in the months of January and February, Kenya traded by 28.7% less compared to the first two months last year.

The Gross Domestic Product so far this year will be predictably low compared to last year, because there is uncertainty on who will become president come the 2012 elections.

Daystar University

Athi River Campus

Submitted by Diana Macharia 08-0403

Final Project for COM 408 B A Business and Economics Journalism

Submitted to Miss Wambui Wamunyu

Submitted on 21^st April 2011