Kenya’s New Currency Has Problems|
October 23, 2013
Kenya is planning new coins and bank notes that for the first time since independence will not depict its current or past leaders.
The new currency will comply with Article 231(4) of the 2010 Constitution mandating that coins and bank notes issued by the central bank may depict symbols of any aspect of Kenya, but may not depict any individual’s portrait.
This should be a simple matter of making and issuing new coins and notes, but in Kenya things won’t be that simple. The new bank notes are likely to be printed through a joint venture with the security printing company De La Rue as was recommended by Kenya’s Public Accounts Committee. The recommendation would involve the government acquiring 40 percent of the British subsidiary company based in Ruyaraka, Nairobi. The problem is that Kenya does not want to tie the Central Bank of Kenya to the exclusive 10-year currency printing commitment being demanded by De La Rue in exchange for the agreement. The joint venture has been projected to cost Kenya 655 million shilling (about $7.48 million US).
Members of Kenya’s parliament have confirmed the joint venture will not guarantee the bank would receive a fair market price for the work to be performed. There are also questions regarding if the Ruyaraka facility has the capacity required to produce the needed currency for the change in Kenya’s currency.
Another matter yet to be properly addressed is the 10-shilling coins that are planned to be replaced with a bank note of the same face value. Local news sources indicated it is considered too early for the central bank to begin educating the public about this change in their change. No information was available at the time this article was being written as to who has been striking these coins.
The biggest problem yet to be addressed, however, is that while Kenya is trying to reach this change in its currency by the Constitution’s deadline of February 2015 the East African Community is still moving ahead with a planned monetary union that includes Kenya.
According an article published in the Aug.21 Standard newspaper, “It is not clear how [the] CBK will release the new notes and coins in the same year the EAC partner states are expected to set up a monetary union. The union will see issuance of new notes and coins in Kenya, Uganda, Tanzania, Rwanda, and Burundi.”
The EAC is an intergovernmental organization comprised of the African Great Lakes region countries of eastern Africa. The EAC has its headquarters in Arusha, Tanzania. Initially founded in 1977, the organization collapsed 10 years later. The EAC was revived in 2000 with an announced goal of uniting the five nations into a single state to be called the East African Federation with a common market and common currency, this being the East Africa shilling. The EA shilling was initially planned to be launched in 2012, but the target date for its introduction has since been pushed back to 2015.
There may be some underlying intrigue as well, regarding Kenya’s new currency. PAC raised questions about what some individuals in Parliament called “an assault on the independence of the Central Bank of Kenya.” It was the cabinet secretary, not the Kenya National Treasury or the central bank that approved the new currency system, knowing fully well the EAC monetary union is moving ahead. (It was Kenya Secretary to the Cabinet Francis Kimemia rather than a central bank spokesman who announced the new coins and bank notes in August.)
The cost of printing new Kenya bank notes has been estimated to cost about 3,721 shilling for each 1,000 notes.
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