Phyllis Wakiaga, CEO, Kenya Association of Manufacturers (KAM)
The Kenya Association of Manufacturers (KAM) applauds and supports the move by the Central Bank of Kenya to introduce the new generation currency notes and withdraw the older Ksh. 1000 from circulation by October 2019.
The Introduction of the new generation currency embraces the spirit of our Constitution specifically through Article 231 (4) on the production and issuance of Kenyan Notes and Coins, which aims to symbolize the diversity and vibrancy of our National Heritage; as well as Central Bank of Kenya Act Section 22 (1) which gives the Central Bank the sole right to issue notes and coins as legal tender thereby reaffirming existing mechanisms to deal with corrupt monetary practices and illegitimate currency.
As industry, we are hopeful that this bold move will curtail the prevalence of the illicit economy by making it especially difficult for counterfeiters, producers of substandard goods, and those trading in uncustomed goods to circulate them in the local market.
This change is likely to re-direct monies that are presently hoarded and funnelled into funding illicit economic activities, into the formal banking and lending structures to finance the production of real goods and services. This in turn will positively impact the purchasing power of our citizens and trigger increase in demand of locally made products, thus boosting genuine local businesses’ capacity to contribute towards strengthening our economic output as a country.
To ensure that the positive intentions of the new currency to our economy are effective, it is vital that the Central Bank Monetary Policy Committee appropriately monitor and analyze the macro-economic environment to curtail any likelihood of excess liquidity flooding the market within the next 120 days, which would lead to increased rates of inflation.
At the same time it is important that the Government, through the National Treasury maintain its fiscal consolidation strategy by delaying the start of new Government projects with the aim to curb likely heightened inflation.
The New Generation Currency is a timely and necessary intervention for our economy to thrive especially at such a critical time when the ground is set for increased trade within the continent. To ensure its success, we need to institute strong measure to deal with the production and supply of counterfeit money, goods and services. Critically, we must also ensure that we strengthen our governance structures to deter proceeds from corruption from being injected into the economy, thereby disadvantaging legitimate businesses and sabotaging any move towards economic progress.