Recently, there have been speculations about a plan by the Kenyan government to recall
phased-out currency notes back into the economy. The notes were in the Ksh1,000,
Ksh500, Ksh200, Ksh100 and Ksh50 denominations. The claim was accentuated by
Kileleshwa Member of the County Assembly (MCA) Robert Alai who announced that the
old notes were on their way back to circulation.
Economist XN Iraki, an associate professor from the Faculty of Business and
Management at the University of Nairobi, argued that such a move would lead to a rise
in inflation and cost the state a significant amount of money to manufacture the notes.
In 2018, the cost of printing the new-look Kenyan currency increased by half to Ksh15
billion amid delays and introducing a new coat of varnish to reduce wear and tear and
prolong its life in circulation.
Iraki also questioned the interested parties in the return of the notes since the initial
phase-out was aimed at wiping out corrupt dealers and counterfeits.
“Who is going to benefit from the old notes being reintroduced? And why would it be
considered?” he questioned.
He also states that governments phase out old currencies in order to get rid of
counterfeits circulating in the economy.
Kenya withdrew the notes in 2018 to crack down on embezzlement and tackle a wave of
counterfeit Ksh1,000 shilling notes. During the demonetization exercise, 209,661,000 of
217,047,000 pieces of old notes that were in circulation were returned. Only 7,386,000
KSh1,000 notes remained at large.
