Kenyans On Dollar Salaries Take Pay Cut As Shilling Gains

Kenyans working for international firms earning in foreign currencies face tough times as the shilling firms against hard currencies. The Kenya shilling begun crawling back ground last November after touching an-all time low of Sh107 to the dollar in November, reversing weeks of windfall for the employees.

Among those seeing the other side of the coin are Kenyan employees on casual or contract engagements with foreign firms. Most of them are paid a standard salary regardless of the value of the local currency.

An employee earning 1,000 dollars four months ago would take home in excess of Sh100,000 as the local unit gained the dubious fame of ranking among the world’s worst performing currencies. But things have changed a lot thanks to efforts by the Central Bank of Kenya (CBK) to save the falling currency.

The same employee is currently earning Sh18,000 less. “Up to now, I do not believe the shilling has steadied this much against the dollar. My prediction was that it could not go below the 90 mark, but the shilling has kept on strengthening making things worse for us,” Joash Kimemia, who works for an export firm in Nairobi, said.

Mr Kimemia noted that he has been forced to change his lifestyle because of the stronger shilling. “I have cut down my spending to match the stronger shilling because my disposable income has declined,” he lamented.

When the shilling was exchanging above 90, Kimemia said he could afford to take his family out for dinner several times. “It stayed there for sometime. This meant that I had a take away salary of about 1,200 dollars. It was enough to give me a decent life and I could entertain my family. But things changed for the worst since CBK increased its lending rate,” he said.

Kimemia said if CBK’s lending rate remains high, the shilling may in future exchange below 80, exacerbating his predicament. “I am planning to move to a less costly house because if it falls below 80, life will become more difficult for me. The last time the shilling exchanged at such a level was five years ago,” said Kimemia who has worked with the company for three years.

Experts blamed the free fall of the currency to a double-digit inflation, increased imports and inconsistent monetary policies. They warned that if the fall was not stemmed urgently, it would push inflation and cost of living to high levels and stall Kenya’s economy.  CBK responded to the crisis late last year by raising its benchmark lending by 7 percentage points within weeks.

Source: Business Daily Africa