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‘Poverty’ to blame for worn out bank notes, says senator

BUSINESS
By Judah Ben-Hur | June 30th 2021
Central Bank of Kenya Governor Patrick Njoroge briefs the media on the new currencies notes, June 3, 2019. [David Gichuru, Standard]

The Central Bank of Kenya (CBK) has blamed “bad handling habits of notes” for worn-out new-generation currency notes in the market.

Appearing before the Senate Committee on Finance and Planning on the quality of new-generation notes, CBK Governor Patrick Njoroge reaffirmed his confidence in the new currency, which he said is “technically superior” to the old ones.

“The new banknotes have a certain varnish on them to reduce wear and tear. They also have a significantly longer lifespan than the old-generation banknotes and are supposed to last one year compared to the others that lasted six to nine months,” said Njoroge.

The new notes also come with improved security features as well as edges that allow visually impaired persons to tell the difference between the denominations.

However, Nominated Senator Rosa Nyamunga said the public has raised concerns over the quality of the currency notes, especially the Sh50.

“I think we understand why the Sh50 bank note circulates quickly. Matatu fare and other transactions we see on the road are normally Sh50 and the lower denomination notes are subject to significant mishandling,” said Njoroge.

The CBK governor stated that following the launch of the new-generation notes in 2019, many people engaged in destructive testing, which involved crumbling the notes to see what happens.

Senator Nyamunga said poverty also contributes to mishandling of the currency notes as some people crumble and hide them in pockets and knots in clothes.

She urged the CBK to boost quality of the notes to cut the expense of printing new ones.

“50 bob is the lowest currency note and it’s the fastest moving. Governor, you should do something about it,” said Nyamunga.

In 2019, the government invested Sh15 billion in the rollout of the new-generation currency notes and taking the old ones out of the market.

Nominated Senator Millicent Omanga questioned Njoroge on the bank's use of an additional Sh833 million in currency generation in the financial year 2019/2020 compared to Sh2.3 billion used in the financial year 2018/2019.

“We launched the currency in June 2019 and in the next four months, we withdrew the Sh1,000 note. That was costly,” said Njoroge.

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