If you were around in 1973 and a loyal customer of this paper, then known as East African Standard, you probably remember buying it at 50 cents. Today, you might have bought it at Sh60, an increase of 10,000 per cent.
This surge in the price of this newspaper has nothing to do with profiteering. In fact, since 1973, prices of all goods and services in the country have increased by more than 13,000 per cent, violently shoving 10 and 5 cent coins into oblivion.
The latest victim of the surge in prices of products -- known as inflation -- is the 50 cent coin. When President Uhuru Kenyatta unveiled new generation coins last Tuesday in compliance with the 2010 Constitution which proscribes portraits of people on the local currency, the 50 cent coin was conspicuously missing.
It is official, the 50 cent coin which until June 2017 was still being minted, is no more.
If you are also a smoker, you will probably remember that 36 years ago, the 50 cent coin would get you a stick of Embassy Light cigarette. Today, the same goes for Sh9, or the price of a whole packet 36 years ago.
All coins, including the Sh5 coin, are quaking in their boots as a maelstrom of inflation leaves in its wake a graveyard of dead coppers and silvers.
And now, inflation seems to have set its eyes on the Sh1 coin. But if the shilling too has been badly battered by inflation, it has not shown signs of capitulation.
Indeed, the decision by Central Bank of Kenya (CBK) to include it in the line-up of the new coins is not only because the law decrees it, but also that the currency is widely indispensable.
One-bob haters are going to wait longer for its exit. This is because consumers treasure it for its value as much as they loathe it for its bulkiness. CBK, whose primary role is to contain inflation, must find the continued existence of the coin a blessing.
True, the shilling -- just as the 5 cents, 10 cents and 50 cents -- has remarkably been stripped of its buying power. So much that today, the coins can neither be found in the tills of supermarkets nor in the pockets of consumers, but in cookie jars in various homes.
Last year, if you mopped up all the pieces of one-shilling coins in circulation, what you got could have bought you 520 four-bedroom houses with lounge-cum-dining, fireplace, bath, two stores and pantry in the leafy suburbs of Runda Estate 36 years ago.
Today, this money would only get you less than 20 of such houses. It would not be enough to pay the salaries of the workers in any of the 47 counties - except for the tiny Lamu County whose entire population, leave alone the county government’s workforce, is a paltry 130,000.
Yet, where other coins have crumbled under the weight of inflation, the Sh1 coin has been indefatigable (see graph).
Instead, more of the coins are being minted -- at the cost of electricity, manpower as well as clean environment. There are fears, unconfirmed, that the cost of minting these coins far exceeds their face value (the CBK did not reveal the cost of minting the new coins; however, it did indicate how much it would pay to print the new bank notes).
The number of Sh1 coins in circulation has almost doubled from 469 million pieces in the 2016/17 financial year to 780 million by end of June 2017. Their share as a fraction of all the money in circulation, however, shriveled further during the period from 0.07 per cent to 0.02 per cent.
CBK, whose chief role is to regulate the supply of money in the economy, decides on whether to withdraw notes and coins from circulation.
Of itself, the Sh1 coin is not of any intrinsic value to consumers. This writer’s attempt to pay matatu fare using 20 pieces of the coin was not well received by the tout who found it disrespectful.
“Hio ni madharau unaleta brathe ama?” (Are you trying to despise me?). Not many people want them, yet few people can do without them.
“The shilling itself looks very bulky, but you still need it for transactions,” says Samuel Nyandemo, an Economics lecturer at the University of Nairobi.
A senior economist in one of the commercial banks who did not want his identity revealed said just because people are rejecting the currency does not invalidate it. It still legal tender.
“True there is a pattern in the economy in that the Sh1 coin is being rejected, but it is still a legal tender,” he says.
In other words, if you had 5,000 pieces of Sh1 coin with which to pay for a dress at a boutique, the seller has no legal basis to reject the money.
In reality, it would be tedious and uncomfortable carrying 5,000 pieces of coins weighing approximately 27.5kgs.
To the country’s economy, the only function of the coin is to provide loose change. Otherwise, the shilling fetches very little.
And because consumers have had nasty experiences of coins burrowing holes in their pockets, they have simply piled them up at home. But they have rarely returned with them to retail stores.
Thus, around 2011, coin-deficient supermarkets started to replace the Sh1 and 50 cent coin with sweets and chewing gum, attracting the ire of CBK who saw this as an attempt to emasculate legal tenders and render them useless.
The apex bank insisted there were many coins in circulation. Between 2006 and 2011, the CBK poured about 137 million pieces of the Sh1 coin into the market. Within the same period it added another 57 million pieces of 50 cent coins.
In total, there were 1.9 billion pieces of coins in circulation by end of June, 2012. This had since tapered off to 1.7 billion pieces by 2017 after the 5 and 10 cent coins were phased out.
A CBK official was quoted saying that of the 1.2 billion coins the bank had distributed, half was hoarded while the other half was carried away by tourists as souvenirs.
To most Kenyans, the Sh1 coin may be bulky and, of itself, lack some purchasing power, but it has immense saving power.
In a highly price-sensitive market as Kenya’s, firms try to outdo each other on price. A price margin of Sh1 might be what separates a firm from extinction.
This cut-throat competition through granular pricing of products is not just good for consumers but for CBK, too. Thus, the continued existence of the Sh1 coin means that shoppers will more likely than not get a 500ml litre of milk at a price of Sh44 and not Sh45.
And as long as firms can only increase prices of products gradually by a shilling or two, CBK is happy as it effortlessly achieves its core function of controlling inflation.
Deepak Dave, founder of Riverside Capital, agrees that micro-pricing continues to give the Sh1 coin some relevance.
“But what I have seen in some countries is that when you remove the last digits, the market will find its own route,” he said.
The Sh1 coin also continues to be minted due to its psychological pricing power. For example, a dress with a price tag of Sh9,999 is cheaper than one with a price tag of Sh10,000.
“But really no one expects to get that change,” says Mr Dave.
But, he says, the endurance of Sh1 coin is also pillared on politics.
University of Nairobi lecturer XN Iraki thinks the reason the Sh1 coin will not leave the scene soon is that it is “the key currency unit”.
Other sub-units like cents and notes, he says, are based on it.
Register to advertise your products & services on our classifieds website Digger.co.ke and enjoy one month subscription free of charge and 3 free ads on the Standard newspaper.