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Thursday, 24 June 2010

Kenya’s horticulture sector hit by the Greek debt crisis

The raging Greek debt crisis has filtered into Kenya’s horticultural industry, causing foreign exchange losses running into billions of shillings as the country reassesses its overdependence on the turbulent European Union market. Players say the crisis that has battered investor confidence across Europe and pushed the euro to its lowest level in 13 months has significantly eroded their earnings, delaying their recovery from other recent shocks like drought, the global financial crisis and the recent export interruption by the Iceland volcano eruption. Kenya sells 82 per cent of her horticultural exports in EU countries where payment is made in the euro, leaving only 18 per cent to the dollar dominated destinations of US, Middle East, Japan and Russia. For many years, the industry has relied on the stability of the euro to navigate through tough economic times, including the global economic crisis of last year. “It is not easy for the industry to come to terms with a falling euro because for a long time investors have relied on its attractiveness to grow,” said Jane Ngige, the Kenya Flower Council CEO. The economic turbulence in Greece, triggered by a deep fiscal crisis after the country’s public debt rose to 115 per cent GDP, has changed the tide against the euro, weakening it against other world currencies, including the Kenya shilling.