FOREX Africa: Cash Crop Farmers Smile Amid Currency Woes

FOREX Africa: Cash Crop Farmers Smile Amid Currency Woes

As a frontier market, the countries of Africa represent both tremendous opportunities and tremendous risks. On the risk side of the ledger are all the usual complications of international trade and investment compounded by the problems inherent in a developing, emergent continental market consisting of 54 countries and 1.1 billion people – it’s a lot to keep track of.

Luckily, the ups and downs of the African currency markets aren’t one of them if you know where to look. To help with that, AFKInsider has compiled all the news you need to know now in order to slim down your currency risk in the week ahead. Let’s see what’s happening out there

Happy Farmers

African farmers that cultivate cash crop produce like tea, coffee, cocoa and cotton are a happy lot this year because of the foreign exchange gains they have made due to weakening local currencies.

Despite falling commodity prices globally, many agricultural produce exported out of Africa have fetched higher revenue for farmers as they are sold in dollars, a currency that has strengthened against almost all sub-Saharan Africa currencies.

Small-scale tea growers in Kenya last month received higher bonus payment from the national tea development agency due to better prices in the international market as well as a strong dollar that has increased the value of exports.

“We are happy with the improvement in earnings this year,” Mugambi Nkanata, a farmer who delivers his tea to Imenti Tea Factory in central Kenya, told Business Daily.

Like most African currencies, the Kenyan shilling has depreciated 15 percent against a globally stronger dollar this year.


Other currencies including the Ugandan shilling and the Ghanaian Cedi have depreciated as much as 20 percent so far this year and are expected to fall further if the US fed rise interest rates before the close of the year.

In Uganda, coffee farmers have increased their production this year in anticipation of better earnings, despite coffee prices on the international market hitting a two-year low.

According to the Uganda Coffee Development Authority (UCDA), the landlocked East African country has posted gains both in volume and value at the international market this year.

Coffee is Uganda’s leading commodity export and its single biggest source of hard currency.

With oil-money thinning out this year, governments in Ghana and Nigeria are focusing more efforts to improving the agricultural sectors in their countries in an effort to diversify revenue.

Ghanaian cocoa farmers have benefitted from a number of  incentives including a higher selling price aimed at keeping them from smuggling their produce to Ivory Coast where the produce fetches better prices.

According to a Reuters report, the West African nation said it will increase the amount it pays per ton of the commodity  by 21 percent to $1,759 a ton to deter smuggling into neighboring Ivory Coast, the world’s leading producer. Ivory Coast set its producer price at $1,718 per ton.