WAITING FOR CHANGE

While we eagerly waited to welcome a more prosperous 2011, the currency was doing what it has lately been doing best at – depreciating. The shilling began to weaken in December 30^th of 2010 when it exchanged at an average of Ksh 80.64 per US dollar in the foreign market.

Four months in and the year is anything but hopeful. The only constant seems to be the rise of inflation. If one could go back to 2010, the hindsight acquired today would be very helpful.

According to the weekly CBK (Central Bank of Kenya) bulletin, the shilling has been having a mixed performance registering averages of Ksh 81.01, Ksh 81.16, Ksh 84.88, and later stabilizing at Ksh 83.66 per US dollar in the months of January, February, March and April respectively.

It was when the shilling hit an all time low on March 15^th trading at Ksh 86.70/80 per US dollar that the country stood still. This performance is accredited to speculation in the forex market and the Arabian crisis as was mentioned by the Central Bank of Kenya Governor Njuguna Ndung'u who talked to Reuters on March 15^th. Something had to be done.

The governor’s solution to the crisis was to let the market correct itself. This decision was met by a lot of hostility, but in my opinion, Mr. Njuguna knows what he is doing. I watched a television series called Lie To Me once, and I remember the star of the show, Dr. Carl Lightman, saying, “Good chess players think five moves ahead. Great chess players think one move ahead, but it is always the right one.”

This decision aided by the Monetary Policy Committee’s increase of its Central Bank Rate (CBR) to six per cent on March 22 according to the March 25^th weekly CBK bulletin helped to stabilize the market slightly.

However, the health sector is yet to benefit from the shilling’s performance due to the increase in drug prices. The only benefit so far is that due to the weakening of the shilling, neighbouring East African countries and foreigners if they so wish will enjoy medical services in the country at a cheaper cost. This is sad news as the health sector has been in a poor state lacking in resources and is overcrowded by trained staff.  With nothing else to do, Kenyans are left with the hope that the situation will be resolved soon.

(399 words)

Lilian Koki

08-0739