NAIROBI, Kenya, Jun 7- Paint Manufacturer Crown Berger is now urging the government to intervene and stop the shilling from depreciating further against major world currencies.
Chief Executive Officer Rakesh Rao said on Monday that the weakening shilling is hurting many businesses most of which are now considering passing on the costs to their end consumers.
The local currency on Monday touched a new five year low when it traded at Sh82.25 to the US dollar.
“At the moment, the way the currency is behaving (it) is a major concern to us because it is going to hit us very badly yet there is no word from the government. It’s really worrying because we have to take action (on) whether we want to pass on the increase to our customers or whether we will compromise on our profitability,” he complained.
While a weak shilling is favourable for sectors such as horticulture, tea and coffee which are paid in dollars, it is the reversal for importers of products such as oil, machinery and other raw materials as they have to dig deeper into their pockets to pay for their goods.
It is also feared that a weak currency will push up inflation which last month went up marginally to 3.9 percent.
Mr Rao said manufacturers were also looking to Treasury to reduce the import duty on raw materials as well as improve security as some of the ways to improve the business climate in the country.
Such measures, he said would make firms competitive and thus result in a price reduction on consumer goods which would spur their uptake and eventually lead to increased revenue collection for the government.
“The government has talked about transforming the city into a 24 hour economy in the last two years but nothing has happened yet. They need to improve security because that would help us improve our efficiency and production capacity,” he said.
He added that the government should hasten the implementation of the Anti-counterfeit Act to curb the influx of sub-standard goods into the market.
To cut its production costs and encourage the use of quality products, he said Crown Berger was working on a strategy that would enable it to provide affordable paint in the market.
The boom in the building and construction sector over the last few years coupled with the high operating costs had seen the prices of many paint brands go up which has forced people to go for low quality products.
“We are employing our efficiency in a big way which can result in cutting down the costs which we can pass on to our customers without compromising the quality,” the CEO added.
Mr Rao spoke during the company’s Annual General Meeting where shareholders approved a dividend payout of Sh1.25 per share.
The future outlook of the company, shareholders heard, was positive owing to the recovery signs exhibited in the economy and the opening up of the regional market which allows firms to freely conduct their business across borders.