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New Kenyan banknotes raise old concerns over personality cults

By Morris Kiruga, in Nairobi
Posted on Monday, 3 June 2019 13:04

Kenya's Central Bank Governor Patrick Njoroge REUTERS/Njeri Mwangi/

Kenyans have four months to switch their old one-thousand shillings notes for new ones, as the East African nation seeks to curb illicit financial flows and fight counterfeits.

The demonetisation of the highest currency denomination in the country was announced last weekend during the annual Madaraka Day celebrations where the Central Bank governor, Dr. Patrick Njoroge, launched the new-look currency.

  • “We have assessed the grave concern our large banknotes — particularly the older Sh1,000 series are being used for illicit financial flows in Kenya and other countries in the region,” the governor said in his speech.
  • Some 97% of the currency in circulation in Kenya is in banknotes, with slightly over 41% of them being Kshs. 1000 notes.

The new shs. 1000 note, whose theme is governance, bears an aerial view of Parliament Buildings. The other denominations have different themes: the Shs. 50 has green energy, the shs. 100 agriculture, the Shs. 200 social services and shs. 500 tourism.

The launch of the banknotes completes Kenya’s measures to revamp its currency as new coins are already in circulation after their launch six months ago. The process was triggered by the 2010 constitution, and was supposed to be complete by August 2015. It was delayed by contracting issues and multiple lawsuits.

In 2012, the Central Bank invited designers to propose the new-look currency on the themes of “Kenya Reborn” and “Kenya Prosperity.” It also said that the design elements should be “unique to Kenya, attractive, socially acceptable and culturally relevant while creating harmony among Kenyans.”

A key part of the 2010 law was that the new currency should not “bear the portrait of any individual,” a provision meant to fight the personality cults that defined Kenya’s first four decades as an independent nation.

  • The new currency circumvents this legal provision by having an image of the Kenyatta International Convention Center (KICC), with a statue of the first President, Jomo Kenyatta, in the foreground.
  • The image appears on all the new notes, and has already triggered controversy with some, such as opposition legislator and former Ombudsman Otieno Amollo questioning its legality.

Ending the era of personality cults and dubious deals were prominent pledges of Kenya’s third government, which came to power in 2002. Then President Mwai Kibaki, who also oversaw the promulgation of the new constitution eight years later, promised to keep his name and portrait off currency, among other things.

  • He broke that election promise almost as soon as he got into power, with the Central Bank issuing a limited Shs. 40 coin and two commemorative coins with his portrait in 2003.
  • Kibaki’s finance minister at the time, David Mwiraria, also cancelled a 10-year contract between the government and De La Rue that had been signed in the last days of the previous government. The printer’s parent company won the next contract, but the process was delayed by a plan by the government to buy a stake in the local subsidiary.
  • In April 2019, De La Rue announced a joint venture between one of its subsdiaries, which it listed as dormant in its 2018 filings, and the Kenyan government. The deal saw the Kenyan treasury take up 40 percent in De La Rue Kenya EPZ Limited, one of three subsidiaries the British multinational has in Kenya.

In 2016, the regulator was forced to cancel the tender process after several international bidders quoted zero price in their bids. The three-year, Shs. 11.2 billion deal eventually went to De La Rue, a British paper and security printed products with a Kenyan subsidiary.

  • A CBK insider told The Daily Nation that part of the reason for the cloak-and-dagger announcement last weekend was to ringfence the currency against “serial litigious activists.”
  • That most likely refers to one activist, Okiya Omtatah, who challenged the November 2017 award of the currency printing tender to De La Rue. The activist had moved to court on the basis that De La Rue did not qualify for the 15 per cent margin of preference because it is not a preferred supplier under Kenyan law. The appellate court, however, overturned the High Court’s decision and allowed De La Rue to finish its contract.

Omtatah wrote in The Star that the new currency is illegal. “In the case that I filed in court sometimes back, the judge ruled that the CBK and I should go back and agree. CBK was supposed to remove the portrait of Kenyatta from the notes, but they went ahead and did it the way they want.” He also hinted that he would be going back to court to “invalidate this money.”

What’s next: By Monday, the first of what is likely just the first of several suits against the new currency was filed in Nairobi by East African Legislative Assembly member Simon Mbugua.

 

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