Deadline on older notes has since gone, what next?

The High Court has given the Central Bank of Kenya thumbs up on the new generation currency notes by determining that there was no violation of the Constitution in the design, that the statue of Mzee Jomo Kenyatta at the Kenyatta International Convention Centre, a national landmark, is an integral part of the building, and is not a portrait. Contentious as that may sound, it settles the matter for now, assuming the petitioner won’t appeal.

Besides, the Court was also in agreement with the CBK on the issue of participation. It held that the regulator carried out extensive, reasonable and all-inclusive public participation, leading to the final design of the currency.

The Court further ruled that CBK had the power and discretion to withdraw the older series Sh1000 notes, that the four-month period for withdrawal was adequate and reasonable, and that CBK had the power and discretion to set the period, adding that CBK discharged its duty properly.

The rationale by the CBK on the withdrawal of the older series Sh1000 notes within four months of the launch of the new generation currency notes was from government’s own admission of an existence of a thriving mafia economy. An economy where a few, well connected, mostly state mandarins hoarded from the mainstream financial systems billions of shillings unaccounted for. If the older notes were to be rendered valueless in 120 days, it would force the mafia to release money back into the economy. 

That, however, was to be possible, if the holders of the ill gotten wealth were to follow the stringent laws put forth by the country’s financial regulator. The most notable of these rules was that commercial banks should not accept cash deposits of Sh1m and above without proper explanation by the depositor as to how it was acquired. If the commercial banks were to play to the rule, then the CBK would have achieved its purpose of taming corruption by rendering ill-gotten cash valueless. 

Did the commercial banks remain true to the call?

We have witnessed a flurry of activities in the recent past relating to this especially as the deadline approached. Property, including motor vehicles and land were bought by cash at exaggerated value and the harambee movement was scaled up especially in building of churches. The deadline has since come and gone. We hope the CBK will share a detailed report of how effective the withdrawal of the old Sh1000 notes was in flashing out hoarded cash and arresting corruption and what more they are doing moving forward in the effort to tame corruption, arrest and prosecute those who hoard and launder money, a vice that has so crippled the Kenyan economy. 

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