After the withdrawal of the old Sh1,000 notes, Sh7.4 billion has been rendered worthless.
As Central Bank of Kenya (CBK) Governor Patrick Njoroge rightly pointed out, this amount that didn’t reach the banks is not pocket change.
CBK suspects the bulk of the amount is dirty money whose holders, for obvious reasons, were unable to redeem.
There is a possibility some of the money, a small fraction though could have been lost by individuals or taken abroad by tourists as souvenirs. Bedridden persons could have been unable to change their money too.
What is most interesting about the demonetisation process is that banks have flagged 3,127 transactions which they suspect involved dirty money that CBK hoped to unearth when it unveiled the process on June 1.
While many people opted to exchange the old notes with new ones, others decided to deposit the condemned cash into their bank accounts- about Sh60 billion.
A total of 209 million pieces of the old notes were returned, out of the 217 million that were already in circulation by June 1.
Ninety-nine per cent of the transactions were of less than Sh1 million, meaning they did not need additional scrutiny as much as they were subjected to anti-money laundering rules.
As to whether the process was a success, the jury is still out there. However, Kenyans have questions, and they expect answers. The most important one is whether the exercise met its objective of fighting illicit cash flows and counterfeit currency.
Although CBK Governor said some dirty money could have “slipped through filters” into the banking system, he insisted the process was successful.
Importantly, Dr Njoroge said they have already forwarded the 3,127 suspicious transactions to the investigating agencies. That’s the right thing to do.
The Government needs to investigate these transactions and bring to book those who stole public money.
The success of failure of the demonetisation process will depend on whether the financial sector is cleansed.
Kenyans want results; they need proof that the money spent in the demonetisation exercise did not go down the drain. Arresting those who looted public money is a good starting point.