Biggest Business Losers As Kenyan Shilling Stamps Authority Against Dollar

This surge has been attributed to a combination of strategic interventions by the Central Bank of Kenya (CBK) and a robust influx of foreign investments, particularly in Kenyan domestic debt securities.

According to Treasury Principal Secretary (PS) Chris Kiptoo, the shilling's dramatic rise was attributed to investors' confidence drawn from the government's move to buy back the Ksh316 billion (USD2 billion) Eurobond maturing in June 2024.

"I want to encourage Kenyans that the risk of failure to settle for the Eurobond is gone. Sell your dollars and get back to business. Don't do any speculation anymore,” Kiptoo advised. 

An image of US dollars. /GETTY IMAGES

"The issue has been addressed. There is now confidence and you can tell the shilling is beginning to improve. As of this morning, I was told it was trading at 151 units and yesterday it was at 157, and previously it was at 160 and that is very good news."

However, despite the good news this brings for the Kenyan economy, some businesses stand the risk of being hit hard by the turnaround in fortunes, with some banks buying dollars as low as Ksh130 while selling as high as Ksh153.

Viral Tea takes a look at the biggest losers of the Kenya shilling resurgence against the US dollar:

Kenyans Hoarding Dollars

Though not a business, Kenyans who had been hoarding dollars stand the greatest risk of making losses, should this trend continue. 

The depreciating shilling against the dollar offered a honeymoon period for them but the latest developments are having them come back to reality, forcing many of them to dispose of their dollars in fear of the US dollar continuing to lose out to the shilling.

On Thursday, February 15, Deputy President Rigathi Gachagua, while speaking in Murang'a County, urged Kenyans to sell their dollars.

"I told Kenyans the truth. I told those who had hidden dollars in their homes to sell them, but they didn't listen to me. The President has made plans and the dollar has now dropped,” said Gachagua.

He added, “I want to tell Kenyans with dollars to sell them today, tomorrow, and the day after tomorrow. If you don't sell, you will incur a big loss. This dollar will reach one hundred. If you lose, don't ask me anything." 

Real Estate

Select landlords in Nairobi and other major towns who had been recently charging rent in dollars as opposed to shillings may have to reverse their fortunes, moreso if tenants revolt and go back to paying rent in shillings.

The charging of rent in dollars became a popular trend in 2022 when the Shilling began to drop in value. Most property owners who charged in dollars are those with rental and commercial space within posh estates.

Posh estates within Nairobi mostly host multinational companies hence the move by landlords to charge rent in dollars, but the U-turn could turn into a loss-making process in a huff.

Just recently, Knight Frank Kenya in its Kenya Market Update report covering the second half of 2023 termed the decreasing demand in office spaces to, you guessed it, the shilling losing to the dollar.

"However, due to the persistent loss of purchasing power of the Kenyan shilling against the USD, landlords face losses when collecting rent in KES while servicing dollar-denominated loans. In response to this exchange rate challenge, landlords have increasingly favoured collecting rent in dollars, a trend expected to continue in the long term," stated the report.