• Kenya’s forex reserves dipped to $6.2 billion on May 19, an eight-year low, before a slight improvement to $6.4 billion on May 26.
• At $6.4 billion, Kenya’s reserves are just 3.60 months of import cover, which is below the Central Bank of Kenya’s desired target.
• What’s more, the reserves are below the East Africa Community preferred threshold of 4.5 months of import cover, hence exposing the country to high volatilities in the global market.

A dip in export earnings, coupled with reducing diaspora inflows at a time of huge debt repayments have left Kenya grappling with low forex reserves, raising concerns on the health of East Africa’s economic powerhouse.

The low forex reserves are further compounding the dollar shortage problem that has been gripping importers for months. Importers, mainly in the manufacturing and the energy sectors, have been struggling to secure the greenback to replenish their suppliers.

Kenya’s forex reserves

• Kenya’s Nairobi Securities Exchange posted drop in capitalization in April due to investor flight.
• Other poorly performing bourses were Uganda, Mauritius, Namibia, Morocco, Tanzania, Rwanda and Tunisia.
• Zambia, South Africa, Ghana and Egypt remained positive railing Zimbabwe and Malawi.

Zimbabwe has maintained the lead in the African equity markets returns by recording the highest gains at 112.33 percent year-to-date, the latest data shows. In the period under review, Malawi recorded the highest month-on-month value of 10.96 percent.

At the same time Kenya posted the highest drops both on year-to-date and month-on-month, Nairobi Securities Exchange (NSE) monthly barometer indicates, which stood at negative 15.56 percent and minus 3.52 percent, respectively.

Other poor performers across Africa were Uganda, Mauritius, Namibia, Morocco, Tanzania, Rwanda and Tunisia. In West Africa, Nigeria performed poorly on the month-on-month index but remained positive year-to-date. Zambia, South Africa, Ghana and Egypt remained positive railing Zimbabwe and Malawi.

Kenya’s …

• Rwanda and Kenya who have already started trading through the agreement.
• Mid-February, Tanzania also said it was ready to trade under the agreement.
• The implementation of AfCFTA is projected to increase intra-African trade significantly, especially in manufacturing.

Uganda has expressed readiness to join Kenya, Tanzania and Rwanda in trading under the African Continental Free Trade Area (AfCFTA) as the continent slowly embraces the pact.

The implementation of AfCFTA is projected to increase intra-African trade significantly, especially in manufacturing.

The share of intra-Africa exports to total global exports is expected to increase in Tanzania by 28 per cent, Uganda by 29 per cent, Rwanda by 33 per cent and Kenya by 43 per cent.

“As Ugandan private sector, we are ready to trade under the AfCFTA Guided Trade Initiative and follow our counterparts from Rwanda and Kenya who have already started trading through the agreement,” East African Business Council (EABC) Vice …

Currently, Africa is over-exposed to the impact of the US Dollar. Thus, African nations must either act individually or together to mitigate these effects. Dollar strength bursts are cyclical. Therefore, there should be enough time to implement efforts before the next one occurs. African governments have recognized the harm done in the previous year and should work round the clock to find a lasting solution.…

• The change in patterns of trade triggered by these two major events is now forcing the MNCs to go back to the drawing board.
• MNCs need to reconfigure their trade routes. They have to re-lobby for assured capital and they have to broker new destinations for their goods.
• With the changing global trade polarities, the MNCs are rethinking China, and eyeing future giants like Africa. 

The much acclaimed African Continental Free Trade Area (AfCFTA) that came into being last year may just have saved Africa from a new world trade order.

Thanks to the global pandemic and then the Russia-Ukraine war, the plate tectonic of global trade is shifting. The resulting divergence and convergence are squeezing and pulling in different directions.

Multinational Companies (MNCs) have, for the last three decades or more, controlled trade. These international corporations have enjoyed the fruits of globalization more than any other business entity.

They …

The two south American nations are exploring methods to increase bilateral commerce and wean themselves off the mighty US currency. Its announcement has been widely criticized since they are not a natural fit for a single currency. This is due to one country’s relative economic prosperity and the other’s economic upheaval. This experience between Brazil and Argentina is instructive and illustrative for African nations with comparable aspirations to develop a single currency.

• Brazil and Argentina announced early last month that they would create a joint currency to increase trade and political relations.
• Similarly Africa has expressed the same ambitions at different times. The advent of AfCFTA gives further impetus to the concept that Brazil and Argentina has reignited.
• Brazil and Argentina first came up with the idea of a joint currency in the 1980s but it never took off because economic fundamentals.
• The joint currency experiment by Brazil and Argentina