Njoroge: This is the money we have collected from Kenyans in demonetisation exercise

Additional reporting by Jimmy Mbogo

The State has collected 209.66 million old-generation Ksh1, 000 notes out of the 217 million pieces that were in circulation by September 30, Central Bank of Kenya Governor, Dr Patrick Njoroge, said on Wednesday, October 2.

In a 4-month demonisation campaign, that means the government has reabsorbed into the system Ksh209.66 billion out of the Ksh217 billion that was in circulation by September 30.

Njoroge said, in a press conference at the CBK headquarters in Nairobi, that throughout the exercise that began on Madaraka Day, June 1, the State flagged 3, 172 suspicious transactions.

Njoroge said Kenya had two reasons which triggered the demonisation exercise.

“Demonetisation is done for a number of reasons. In Kenya, we did it for two reasons: the first one, was to deal with illicit financial flows in Kenya and other countries. The second reason was that we needed to deal with counterfeiting of the Kenyan currency; the bank note of choice was Ksh1, 000,” said Njoroge.

“We did not do that to destabilise your financial position,” he added.

The CBK chief said the regulator chose a 4-month window to wipe out the old-generation Ksh1, 000 notes so as to give Kenyans ample time to exchange the old money with new tender.

“There are two general approaches to demonitisation. The first one is what is called the shock approach, where you demonitise overnight. This happens where there is significant dislocations in the economy. The other approach is the gradual approach, which minimises disruptions to the economy and also enhances the effectiveness in addressing the objectives; in our case, it is corruption, money-laundering and tax evasion,” said Njoroge.

“There are some questions that Kenyans asked throughout the exercise: Some said: ‘was 4 months enough’? Others said: ‘Was 4 months too much? Maybe we should have done 2 months’. We had to strike a balance between being overly generous for the common mwananchi to allow them a lot of time to exchange the old money,” said Njoroge.