EABL takes Ksh.1.5 billion loan to plug dollar shortage

East African Breweries Limited (EABL) has taken a Ksh.1.5 billion dollar-denominated bank overdraft to plug gaps created by limited foreign exchange supply.

The manufacturer says the foreign exchange overdraft has been enforced by the continued dollar shortage stating it is only able to access about 5,000 US dollars from banks every day against a greater FX demand.

“We have taken a bank overdraft to manage the current liquidity in foreign currency primarily. This has meant that we have had to apply foreign currency overdraft to meet dollar demand for payments,” noted EABL Group Chief Finance Officer Risper Ohaga.

“We don’t borrow in FX as a matter of principle. However, with the limited liquidity of dollars, we have managed this by getting an overdraft in dollars and we pay it down as liquidity becomes available,” she added.

EABL Group Managing Director Jane Karuku expects dollar shortages to remain the norm should global risks persists, complementing similar remarks to other market participants who continue to experience dollar shortages.

“In Kenya, we know the topic of conversation about the dollar, exchange rate and availability. This is not likely to change as long as we have global shocks,” she said.

Despite the continued difficulties in accessing dollars, the Central Bank of Kenya (CBK) has played down the stay of the dollar crunch insisting the supply constraints now stand resolved.

“I think this is an old story. Specific importers and those seeking to obtain dollars have been working with their banks and understand significant shocks to the economy,” CBK Governor Patrick Njoroge said on Thursday.

“This has since been resolved, and as far as I know, the purchasers of dollars have been going to banks and working with their banks. Banks have nevertheless had to build the dollar requirements over time.”

According to sources within the manufacturing industry, the dollar shortage crisis has somewhat become the norm over recent weeks.

The CBK had met banks and private sector actors in early June with the view of ending the dollar crunch.

The limited supply of dollars in the money markets is tied to rising demand for the green buck amidst increasing global commodity prices which has meant local importers being required to part with more dollars to make purchases.