Kenya Association of Manufacturers (KAM) has lauded the move by the Central Bank of Kenya to introduce the new generation currency notes and withdraw the older Sh1000 from circulation by October 2019.
The manufacturers’ umbrella body said in a statement that the Introduction of the new generation currency embraces the spirit of our Constitution specifically through Article 231 (4) on the production and issuance of Kenyan Notes and Coins.
“…which aims to symbolize the diversity and vibrancy of our National Heritage; as well as Central Bank of Kenya Act Section 22 (1) which gives the Central Bank the sole right to issue notes and coins as legal tender thereby reaffirming existing mechanisms to deal with corrupt monetary practices and illegitimate currency.” Said KAM Chairman Mr Sachen Gudka adding:
“As industry, we are hopeful that this bold move will curtail the prevalence of the illicit economy by making it especially difficult for counterfeiters, producers of substandard goods, and those trading in uncustomed goods to circulate them in the local market.”
This change is likely to re-direct monies that are presently hoarded and funnelled into funding illicit economic activities, into the formal banking and lending structures to finance the production of real goods and services. This in turn will positively impact the purchasing power of our citizens and trigger increase in demand of locally made products, thus boosting genuine local businesses’ capacity to contribute towards strengthening our economic output as a country.
The new generation banknotes were launched by President Uhuru Kenyatta during Madaraka Day celebrations on 1st of June.
“The new banknotes will circulate alongside those previously issued but not withdrawn. However, we have assessed the grave concern that our large banknotes—particularly the older one thousand shillings series—are being used for illicit financial flows in Kenya and also other countries in the region. More recently we have seen the emergence of some counterfeits. These are grave concerns that would jeopardize proper transactions and the conduct of commerce in our currency.” Central Bank Governor Dr. Patrick Njoroge said.
According to the governor, in a bid to deal conclusively with these concerns, all the older one thousand shillings series shall be withdrawn. By a Gazette Notice dated May 31, 2019, all persons have until October 1, 2019, to exchange those notes, after which the older one thousand shillings banknotes will cease to be legal tender.
To ensure that the positive intentions of the new currency to our economy are effective, it is vital that the Central Bank Monetary Policy Committee appropriately monitor and analyze the macro-economic environment to curtail any likelihood of excess liquidity flooding the market within the next 120 days, which would lead to increased rates of inflation.
At the same time it is important that the Government, through the National Treasury maintain its fiscal consolidation strategy by delaying the start of new Government projects with the aim to curb likely heightened inflation.
KAM says that the New Generation Currency is a timely and necessary intervention for our economy to thrive especially at such a critical time when the ground is set for increased trade within the continent. To ensure its success, we need to institute strong measure to deal with the production and supply of counterfeit money, goods and services. Critically, we must also ensure that we strengthen our governance structures to deter proceeds from corruption from being injected into the economy, thereby disadvantaging legitimate businesses and sabotaging any move towards economic progress.