On Wednesday, Kenyan President William Ruto proposed that his government will now purchase oil using Kenyan shillings. Ruto accused oil cartels of hoarding dollars in response to the dollar crisis, causing a fuel shortage in the country.
The Dollar Shortage in The Country and Reasons for the Resolve
The country has had a real-time dollar crisis, with the Kenyan shilling (KSH) weakening against the dollar. As insurance, Ruto was quick to respond to the worries of many, with the dollar being a major transaction commodity for many international trades.
“I want to assure those in Kenya who were facing challenges of access to dollars that we have taken steps to ensure dollar availability in the next couple of weeks; things are going to be different because our fuel companies will now be paying for fuel in KSH,” Ruto said at the Nairobi Security Exchange.
On how Kenya will use shillings to purchase oil, Ruto said: “We just concluded last week an arrangement in our fuel sector that will see Kenya access all our fuel needs in different six-month credit.”
Earlier this month, energy and Petroleum Cabinet Secretary Davies Chirchir said the government signed a deal with Saudi Aramco to supply Kenya with diesel and super for the next six months. Additionally, Abu Dhabi National Oil Company will deliver three cargoes of Super petrol every month.
The resolve would be that local oil companies would pay for oil imported on credit through a government-to-government deal in Kenyan shillings. This would ease pressure on the local currency, which continues to hit new record lows weekly.
A Complete Turn Away from the US Dollar?
President William Ruto revealed that his administration is implementing measures to address the scarcity of dollars.
“I am giving free advice that those hoarding dollars, you shortly might go into losses,” he said. “You better do what you must do because this market will be different in a few weeks,” warned Ruto.
The obvious move away from the dollar comes when a flood of nations is trying to cut dependence on the dollar, fearing weaponization by the US. The weaponization refers to the US’s move to freeze nearly $300 billion of Russia’s foreign currency reserves. This weaponization makes Russia and China, the two biggest geopolitical rivals of the US, promote their alternative financial infrastructures.
However, there may be so much to come of this, as many countries are now looking for options to end this monopoly.