Are 50 cent and one shilling coins on the way out?

By Lillian Aluanga

Customers and traders are avoiding low denomination coins, begging the question, are they on their way out?

Mr Geoffrey King’oto, a newspaper vendor, says it is becoming difficult to sell papers due to "lack of loose change".

Based at Nairobi’s Kencom bus stage, King’oto says most customers are reluctant to accept 50 cent and one shilling coins.

"Customers are rejecting the coins, arguing that they are valueless. Some people come to buy a paper but if all I have is the one shilling or 50 cent coins, they go elsewhere," he says.

In almost every corner of the country, the coins are being rejected by some customers and traders, while others are looking for them. But the Central Bank of Kenya insists the coins are still valid.

Recently, Tuskys supermarket and Uchumi supermarket, Aga Khan Walk branch in Nairobi, appealed to their customers to bring their reserve loose change.

Some supermarkets give sweets to their customers if they don’t have loose change.

And in some matatus, presenting one-shilling coins, elicits an icy stare from the conductor, if not an insult.

In some residential areas, kiosk owners, no longer accept the coins.

There are allegations that some banks are refusing the coins or deliberately frustrating customers who present coins.

But the Central Bank of Kenya dispels fears that coins have been rendered useless.

Misleading notion

CBK also insists there are enough coins in circulation.

"We have released enough coins into the market, but there is a wrong perception by the public over the coins value," says an official at the bank’s Currency Operations department.

He adds: "Let the public know that the 50 cent and one shilling coins are still legal tender and that no business operator has a right to reject them."

Despite CBK’s tough talk, the coins appear to be struggling for acceptance. Ms Susan Orengo, a supervisor at the Nakumatt Lifestyle supermarket, says it has become difficult to convince customers to accept the 50 cent coins.

"Those who reluctantly accept the coins end up dropping them into the Red Cross tins," she says.

The CBK official who sought anonymity, says this attitude has contributed greatly to the problem.

"People are reluctant to accept the coins and when they do, they dump them at home instead of circulating them in the market," he says.

He also faults banks for arguing that counting coins takes longer, thus slowing productivity.

"Let banks invest in coin counting machines and stop discriminating customers with coins," he says.

Co-operative Bank’s Marketing Manager Ngumo Kahiga says while it is true counting coins takes time, they nonetheless accept the currency.

"If someone has a maize roasting business or sells vegetables by the roadside, you would not expect them to show up with wads of notes, since the nature of their business demands the use of coins," he says.

Buying power

Others argue the coins are being shunned due to their diminishing purchasing power.

Former Mandera Central MP and once shadow Finance Minister Billow Kerrow proposes phasing out the coins and have the five shillings coin as the minimum denomination.

"The relative value of these two coins has been lost. People attach value to what they can buy with their money.

If the money can’t buy them anything then they consider it valueless," he says.

But the CBK says introducing higher denominations increases the risk of attracting fraudsters.

The first coins since independence can be traced to 1966 in denominations of five, ten, 25 and 50 cents as well as one and two shillings.

In 1985, the five shilling coin was introduced to replace its equivalent in note form, followed by the Sh10 coin in 1994 and Sh20 coin in 1998.

Over the years, the purchasing power of the 50 cent and one shilling coins has been relegated from buying items like bread and milk to sweets.

Heavy to carry

While customers argue the coins are burdensome, CBK insists they will stay in circulation.

"It is not even about the weight of the coins. It is more about attitude and how people perceive the country’s currency," the CBK official insists.

He cites the US dollar and the value Americans attach to it.

"Its common to find items selling at $ 5.99 which means that for the citizens, every cent counts.

He says there are about 126 million 50 cent coins in circulation, while the total value of coins stands at 4.02 billion.