Central Bank of Kenya introduces new generation currency notes
On Madaraka Day, 1 June, 2019 President Uhuru Kenyatta invited Governor of Central Bank of Kenya Dr. Patrick Ngugi Njoroge to make “a few remarks”. At that point I was in a matatu travelling from Western Kenya to Nairobi. This announcement caught many Kenyans by surprise.
I’m reliably informed that the plan to change currency notes was a top secrecy operation. It is said that only President Uhuru Mwigai Kenyatta was briefed, the rest of the country leadership were caught by surprise just like other Kenyans.
The Governor of CBK started his remarks by thanking the President for visiting the Central bank of Kenya last year December during the occassion of launching new generation currency notes as legal tender. The coins as you may be aware, features Kenya’s big five wildlife: lion, Leopard, rhino, Buffalo, elephant.
The new generation currency notes are more user friendly and caters for the needs of visually impaired people because they have some bars on the margin (which can be felt by touching). The number of bars indicate the value of the note. However, there is need for sensitization (civic education) for this to effectively work.
When did the new generation currency notes become legal tender?
Central Bank of Kenya (CBK) had foreseen a situation where “litigous activists” will run to court to seek a court orders to stop the launch of the new generation currency notes. Therefore, they published a gazette notice on Friday 31 May, 2019 and the new notes immediately became a legal tender.
Are the notes in line with the legal requirements?
The Constitution of Kenya requires that Kenyan currency should not bear the image of the past, present or future presidents as it was the case in the past. However, many leaders such as Hon. Amolo Otiende (the former Ombudsman) and Mr. Edwin Sifuna (current Secretary General at Orange Democratic Movement) among others expressed their views that the notes did not adhere to the requirements outlined in Constitution of Kenya 2010. Therefore, opponents have clearly indicated that the image of Kenya’s founding President Mzee Jomo Kenyatta should not be featured on the notes.
Supporters of the new currency notes argue that the stature is part of Kenya International Conference Centre (KICC)- a key feature for Kenya. On the other hand, opponents believe that it is possible to take the picture and exclude the stature of Mzee Jomo Kenyatta and hence be in line with the legal requirements. This is a serious debate which also needs your voice. You can start by leaving a comment below.
Old Ksh. 1,000 thousand currency notes withdrawn
The CBK governor announced that starting from 1 October, 2019 the old 1,000 currency note will cease to be a legal tender in Kenya. He cited reasons for making this drastic change. One of them was that many people who engage in illicit financial flows prefer the Ksh. 1,000 shillings note because it is the largest denomination and secondly in recent times we have witnessed money laundering using that note.
What does this mean?
Withdrawing the Ksh. 1,000 currency note from circulation and as legal tender means that people who have those notes have until 1 October 2019 to exchange them with new currency notes. However, that is where there is a problem. Central Bank of Kenya formulated new regulations which require bank customers to explain their source of money when they want to deposit or withdraw money. In fact going forward, you will have to notify the CBK you want to exchange money more than Ksh. 5 million.
This is going to be difficult for currupt people out there who keep millions or billions of Kenyan shillings in their homes to bank all that money. What will they say is the source of the colossal sums of money and where has the money been all this time?
They will be caught or better still, they will have to forfeit the money and never complain about the impact of the new policy. If they take the second option, their money will be worthless.
Any implications of introducing new generation currency notes?
A quick analysis shows that the introduction of new currency notes – demonetization- will possibly help clean the economy. It will help weed out the stolen money horded or hidden in people’s homes. This time round, corrupt people will shed tears, curse and lament. They will feel the same pain the rest of the population feel whenever money meant for buying essential drugs, medicines and other supplies to save lives is stolen or misused. More should be done to make this pain more severe.
People who have been convicted of stealing public resources or misusing public offices or property should be jailed and forced to return what they have looted. Corruption and looting should be declared by the state to be a national disaster. The public relation exercise also known as “kamata kamata” should bear more fruits by getting more people convicted and forced to return what they have looted.
Read more: Analysts comment on demonitisation process
Second implication is that if nothing is done other than withdrawing the Ksh. 1,000 currency notes from circulation, then, the corrupt people will fight back by looting more using the new currency notes and coins. The solution will be to first suspend all public officials who have been mentioned or accused of looting public coffers until their names are cleared. Failure to do so, means that the Central Bank of Kenya is engaging in an exercise in futility, Chasing after the wind.
As a public policy analyst, I will keep you updated on the implications of this new policy in a series of articles. Keep tuned.
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