NAIROBI, Kenya, Nov 30- President Uhuru Kenyatta says the Central Bank of Kenya is at the advanced stage of revising the Sh 1 million threshold for deposit and withdrawals in banks noting that it will facilitate easy transactions of MSMEs and help them weather the covid-19 effect.
During the Mashuja Day celebrations held on October 20, Kenyatta had urged the country’s National Treasury and other stakeholders to immediately revise the cash transactions threshold upwards.
He proposed that the requirement for bank customers to disclose the source, intended use, and beneficiaries when depositing and withdrawing cash raised above Sh1 million.
“I hereby order the National Treasury, after consultations with other stakeholders, to immediately cause the upward revision of the cash transactions reporting threshold from the current mark of Sh1 million applicable to both withdrawals and deposits by customers. The financial institutions will retain their reporting obligations to the Financial Reporting Centre,”
The law mandates financial institutions to keep records of cash transactions of more than Sh1 million and report suspicious deals to the Financial Reporting Centre (FRC).
Nonetheless, Kenyatta argued that the implementation of the framework by banks had been onerous for the growth of Micro, Small, and Medium Enterprises (MSMEs) which largely transact in cash.
“Cash still remains an important payments channel for MSMEs, representing 80 percent of all their financial transactions. The implementation of cash transactions requirements by banks has not been facilitative of the operations of MSMEs and has to some extent inhibited their growth.”
Additionally, Kenyatta said that the fiscal stimuli issued by the government amounting to Sh257bn have lessened the impact of COVID-19 in the economy fourteen times less than that on the global economy.
In May 2020, the government unveiled the first element of the Sh53.7 billion stimulus program into various sectors of the economy, a month ago, he issued an additional shs25 billion economic stimulus plan to complement ongoing state interventions aimed at sustaining the momentum of the recovery of the economy.
He said the government’s intervention had borne fruits further singling out the suspension of the Credit referencing Bureau loan defaulters owing Sh5million and below for the period between October 1, 2021, and September 30, 2022.
The President lauded the country’s economy which grew 0.3 percent in 2020 and further rebounded in the second quarter of 2021 with a 10.1 percent growth.
“Kenya’s real GDP recorded a phenomenal 10.1 percent growth during the second quarter of 2021; the highest growth ever recorded in one quarter in Kenya’s history and also the first time Kenya has hit a double-digit growth number,” he said.
In his speech, he further lauded the KRA for its stellar performance having collected Sh10.8 trillion cumulatively in revenues in the last eight years.
“For the first time, KRA exceeded its revenue collection target despite the COVID stress over the economy. KRA projected an Shs 1.5 trillion collection in tax during 2020, they collected Ksh.1.67 trillion which was in excess of their projected intention,” Kenyatta said
