Recently, the new and smaller Sh1000 notes came into circulation. The decision to replace the old notes is part of President Uhuru Kenyatta’s famed prolonged battle against corruption.
Given the strength of our country’s economy, the Sh1000 note has become widely used across the continent. Economic success comes with dangers as a matter of course. The Sh1000 note has also become the note of choice for criminals. With old notes becoming invalidated after the October 1 deadline, citizens possessing them were required to cash them in exchange for new ones. A plan exists to transition all other old notes out of circulation as well.
While the decision to replace the notes may appear to be part of the regular course of action, with heavily used notes needing to be regularly replaced over the course of time, there is an underlying reason for this action. Besides for practicality, this was also a brilliant policy decision that will impede the financial abilities of criminals. Thus, according to the new policy, in order to exchange amounts over five million shillings, one had to execute the transaction at the Central bank and provide an explanation as to the source of the funds.
This stipulation was targeted at money launderers, thieves and tax evaders, all who were, of course, unable to explain the source of their revenues. By announcing the move on Madaraka Day, only a few months before the deadline, Central Bank of Kenya caught criminals by surprise. These were left with not enough time to appeal the decision or discover ways to evade its implementation.
The successful nature of Uhuru’s anti-money laundering move is already evident. Sh7.4 billion worth of old notes have not yet been exchanged for new ones. This cash has been rendered unusable and has posed a significant stumbling block to those seeking to profit from their ill-gotten gains. Overnight, criminals have lost a significant amount of their wealth, while the government has managed to recover an amount of money equal to a quarter of its annual budget! Through this process, the government has managed to flag over 3,000 suspicious transactions made with illicit funds, which otherwise would never have been identified. Although it was not cheap, costing our country close to 15 billion Shillings, we can see that half of the expense has already been covered.
This successful move to fight criminal activity has sent a stern message to those seeking to undermine our country’s powerful economy. Criminality will cost you and big time. The President has made it clear that he will not stand by while hard working Kenyan’s lose their money to those engaged in illicit activities. According to Central Bank Governor Patrick Njoroge, “It cannot be that we glorify people who are involved in crime”. It cannot be and it will not be because the President will not allow it.
Taking the bills out of the economy, of course, has costs. These costs, however, appear to have been considered by the President. His policy will ensure that Kenyan consumers are not deprived of their buying power as a result of money not returned suddenly being taken out of the economy. Thus, instead of simply printing new bills, a sure recipe for inflation, the government will reintroduce the missing funds by purchasing government securities from banks and institutions.
Those whose funds Uhuru’s policy could not force back into the economy through the note replacement policy, will find their funds pumped back into the economy with the help of ingenious monetary policy.
The decision has also been made to decorate the bill with a statue of our forefather Jomo Kenyatta on one side and a lion on the other. What a perfectly appropriate way to convey exactly the message of this campaign; that of strength and a connection to our heritage. During his Independence Day message to the people, Jomo Kenyatta said, “We must all work hard, with our hands, to save ourselves from poverty, ignorance, and disease”.
His son Uhuru is now carrying on his legacy and fulfilling the great aspirations that the father had for our nation.
Mr Mugolla comments on topical issues. Email: [email protected]