Transport Industry thrives on a Weak Shilling

Transport Industry thrives on a Weak Shilling

Money makes the world go round, whoever said this must have had their eyes on the power of the currencies swing like a yo-yo and send the effects to the people and economies. The Kenyan shilling closed the year 2010 at a declined value of Sh80.64 against the US dollar. Since then, it has not gone back to trade below Sh80.00 against the dollar has it had for the better of last year. It has instead recorded a downward trend from this in 2011. The shilling hit an all time low in mid March where it traded against the dollar at Sh86.55. After Central Bank of Kenya assessed the market the shilling strengthened but as per the CBK weekly bulletin as of April 15^th it is still declining in value though slightly firmer than in March by trading at Sh84.11.

 The rate of Inflation in Kenya has raised majorly due to high crude oil prices due to instabilities in the Arab world. According to www.brandkenya.co.ke the transport industry uses up more than half of the fuel Kenya imports. The industry comprises of air, sea, rail and road modes of transport. Transportation plays a big role in ensuring foreign cash earners such as the exports are catered for. For example, the road is used to export to Uganda goods like food, agricultural inputs, ores and minerals.

The weak shilling profits the transport sector by making Kenya’s exports cheap hence they have competitive advantage over exports from countries with stronger currencies. As noted by the Business Daily dated 8^th March 2011; the CBK’s Governor Prof. Njuguna Ndung’u encouraged the private sector to take advantage of the weak shilling to increase their exports.

For cargo companies such as DHL, Mr. Urbanus Kissiu DHL’s marketing assistant said that, “The export business in general has benefitted since it is cheaper to buy from Kenya and sell in other countries with a stronger currency like the US.

The increased fuel prices definitely eat in to expenses of the cargo companies, but this can be balanced by increased volumes of export load. Cargo companies continue to enjoy increased volumes which translate to increased revenues, hence getting cushioned against the weakening shilling and the increased fuel prices.” True indeed the weak shilling lifted Uganda’s uptake of Kenyan goods as quoted on www.tradesmarks.com.

Mercy Mutiso