Connect with us

Featured

NJOROGE: Kenya’s demonetisation: A step in the fight against corruption

Published

on

Loading...
PATRICK NJOROGE

By PATRICK NJOROGE
More by this Author

On September 30, 2019, the withdrawal of the old series Ksh1,000 ($10) notes was successfully concluded. This demonetisation commenced on June 1, 2019, following the launch of Kenya’s new generation notes.

The new notes symbolise green energy, agriculture, social services, tourism and governance, that are the drivers of a reborn and prosperous Kenya.

In deciding to withdraw the older series notes, the Central Bank of Kenya (CBK) assessed the grave concern that these notes were being used for illicit transactions and financial flows, into Kenya and in the region.

More recently, there has also been the emergence of counterfeits. Both these concerns posed a threat to the credibility of the Kenyan currency, and required swift action.

In designing the demonetisation strategy, CBK examined the experiences of other countries, such as Australia, the European Union, Pakistan, the United Kingdom and most recently India.

All considered, the critical consideration was to balance the objective of addressing illicit financial flows and counterfeits while ensuring that the process was not disruptive to the public and the economy.

Advertisement

In this regard, a gradual approach over four months was preferred over an abrupt shock and awe approach. Four key elements underpinned the strategy.

First, ample public awareness was doubly important, also given that CBK had concurrently launched the new generation currency. It was critical that Kenyans across the length and breadth of the country were made aware of the ongoing demonetisation but also the features of the new currency.

To this end, CBK with support from the banking sector and other stakeholders traversed the country—from Nairobi to Lunga Lunga in the southern tip of Kenya’s Coast, Kisumu to Garissa, Wajir to Kakuma (one of the country’s largest refugee camps)—engaging all residents of the country in market places, barazas, streets and bank branches on the coming changes.

A multi-channel campaign was also executed, with over 15,000 advertisements, coverage in social media, television, newspapers and over 80 mainstream and vernacular radio stations.

Second, it was important to quickly provide and maintain a wide availability of the new currency. CBK worked closely with banks to ensure a smooth rolling out of the new currency across the country and its availability.

CBK’s immediate support to banks and other players was needed to recalibrate the verification and note-counting machines, ATMs, and parking payment machines so as deal with the new notes.

Loading...

Special emphasis was placed on the far-flung areas, in the northern and southern parts of the country, cognizant of the heavy use of cash in those regions.

To identify any emerging concerns and facilitate their resolution, a robust feedback mechanism including some strategic surveys was also deployed.

Third, for the demonetisation to be successful it was essential that existing measures on Anti-Money Laundering (AML) and Combatting Financing of Terrorism (CFT) be applied fully.

These measures ensured that illicit funds were filtered out, and not exchanged or enter the financial system. Commercial banks, forex bureaus, and payment service providers (PSP) have over the past few years strengthened their AML/CFT screening, which proved a strong foundation for the demonetisation.

Additionally, reporting and monitoring was scaled up, with positive results—during this period CBK conducted 15 targeted inspections on financial institutions, and over 3,000 suspicious transaction reports (STRs) were reported for further investigation.

Fourth, a collaborative approach with other official entities was adopted to buttress the strategy. Investigative agencies were brought on board to examine the available information for evidence of crimes.

Other central banks were also roped in to ensure that escape of counterfeiters and perpetrators of illicit funds through those jurisdictions was thwarted. This approach is akin to an army overwhelming the enemy by attacking on all flanks at once.

As the sun set on demonetisation on September 30, 2019, inflation, the exchange rate and other key macroeconomic indicators remained stable.

There were no last minute panic queues outside banking halls—the awareness campaign had been effective and ordinary Kenyans had exchanged their notes in good time.

At midnight when the operation was concluded, old series Ksh1,000 notes valued at Ksh.7.4 billion ($70.4 million) had not been exchanged and became worthless.

Demonetisation marks a single step in the fight against illicit finance and corruption more generally. Sustained efforts are needed to deliver victory.

The strong AML/CFT filters that were applied will continue to be deployed. The information already gathered will also support further investigations by law enforcement agencies.

But most importantly, we have created a launch pad for progress towards using less cash for transactions, as we increasingly embrace the readily available mobile and electronic channels. This will make it harder to launder ill-gotten funds, and for cash-based corruption to survive.

The successful conclusion of demonetisation is a testament to careful preparation by CBK and close collaboration with commercial banks and other financial institutions, government agencies, other central banks, and most importantly, the public.

We owe Kenya a new beginning, a Newly Reborn and Prosperous Kenya, building an economy devoid of corruption. This is a call for each and every Kenyan.

Dr. Patrick Njoroge is the governor of the Central Bank of Kenya.

Loading...
Continue Reading

Featured

Our wizards saw the Brave New World, but none saw coronavirus

Published

on

Loading...

By CHARLES ONYANGO-OBBO

Last year in December, Nation Media Group held its first Kusi Ideas Festival in Kigali. The festival tried to peer ahead the next 60 years in Africa.

There were many Brave New World ideas about how that future might look like, and also the perils that progress almost always brings. Needless to say, no one saw Covid-19 coming.

A futurist curtain-raiser in The EastAfrican, titled Africa in 2079, came close to outlining a mirror universe to the one Covid-19 is bequeathing us.

Between London, Zimbabwe, and the corners of Africa where Econet’s fibre optic network reaches, Strive Masiyiwa, founder and chairman of Econet Wireless and former chair of the board of AGRA wrote:

“I recently invested in a tech start-up that has created an Uber-like platform for tractors, enabling farmers to link up with a central database and order a tractor via SMS…freeing the farmer from the drudgery of the hoe. This service is particularly valued by women farmers, enabling them to circumvent social norms that might otherwise hamper their ability to hire a tractor.” From wherever we are hiding from the virus, unable to roam the farm, Uber farming could be the new way a lot of our food is produced.

Loading...

From Tanzania, Aidan Eyakuze, who is executive director of Twaweza East Africa and has been confined in-country as an elegant prisoner for nearly two years because of his love of inconvenient data, painted an intoxicating but strange utopian-dystopian picture of Africa at the end the century.

Advertisement

By 2079, he foresaw the “vast majority of Africans earn their living through multiple micro-tasking (MMTs) ever since every ”job” was unbundled into its component tasks…leaving only those unbundled micro-tasks needing social intelligence, creativity or dexterity to be done by people. All ”taskers” are always-on private contractors who bid relentlessly for the privilege of tasking.

Incomes are kept low by the relative scarcity of tasks requiring the human touch.

“The unrelenting competition for tasks is both stressful and socially divisive — you are competing against everyone all the time…even marriages have renewable term limits, ‘in case someone better comes along.’” With work-from-home regimes, the former has come 78 years earlier.

Indeed, even for the latter, more people now probably think being cooped up with the same man or woman in the house “for better, for worse, for richer, for poorer, in sickness and in health, to love and to cherish, till death us do part,” is a very archaic model.

Between Italy and Kenya, the Society for International Development’s Arthur Muliro, peered into a what a truly borderless Africa might look. Among others, his gaze settled on, of all places, Libya.

“Libya…was now welcoming other Africans and allowing them to settle. The peace deal that had come after a decade of civil war was holding and there was new optimism, in part boosted by the arrival and expansion of new migrant groups who had settled there and were helping rebuild their adopted country.”

On a close re-reading, turns out Aidan hinted that Turkey, which jumped in the Libyan fray as the coronavirus made its way out of Wuhan, might have something to do with it.

Loading...
Continue Reading

Featured

Stadiums progress welcome – Daily Nation

Published

on

Loading...

By EDITORIAL

Loading...

Last week, the Sports ministry’s top officials, led by Chief Administrative Secretary Hassan Noor Hassan and Principal Secretary Joe Okudo traversed the country to access the ongoing construction of stadiums.

President Uhuru Kenyatta also made an impromptu tour of the Nyayo National Stadium to ensure that all is well besides giving Cabinet Secretary Amina Mohamed full support. That has made sure that renovation works resume at all the stadiums — including Kasarani, Nyayo, Kipchoge Keino, Kamariny and Wote — and that everything is running on schedule.

Upon completion of some of these arenas, the country will have positioned itself to host major world events, especially in football, athletics and basketball. The ministry must, therefore, ensure that, while it has given contractors an ultimatum to finish their work, it also insists on quality delivery.

But there are concerns about work at county stadiums, especially in Mombasa, where those who redesigned the arena have done away with the internationally approved running track.

The new stadium has been designed for football only hence won’t host any track and field events. The four lane track will only be for warm up and this has raised eyebrows.

Mombasa County Chief Sports Officer Innocent Mugabe said Bububu grounds in Likoni and Kenya Ports Authority’s Mbaraki Sports Club will be upgraded for sports use. Mombasa being at low altitude, it is suitable for staging major World Athletics events, having staged the 2007 World Cross Country Championships.

Advertisement

Kenya is bidding to host the 2025 World Championships in Athletics and Mombasa can easily be the venue with a good stadium in place. There is still time to build a county stadium.

Loading...
Continue Reading

Featured

Ensure reopening of schools runs smoothly

Published

on

Loading...

By EDITORIAL

Loading...

When Education Cabinet Secretary George Magoha announced a fortnight ago the postponement of school reopening to January next year, he gave an exception. Universities, teacher training colleges and technical training institutions were directed to be ready to reopen in September.

Consequently, they were asked to put in place safety measures prescribed by the Health ministry, including reorganising classrooms and hostels to ensure social distancing. Just a month to the planned reopening, are those institutions really prepared?

In the past few days, Prof Magoha has convened meetings with the heads of the institutions to plan for the reopening and visiting the colleges to assess their preparedness. Preliminary reports from these engagements indicate that just a few institutions are ready.

POOR STATE

At the university level, so far, only Strathmore has been declared ready for reopening. Ensure reopening of schools runs smoothly

For teachers’ colleges, three — Murang’a, Kibabii and Kericho — have met the threshold. Assessment is ongoing for the technical training institutions.

Advertisement

But the broad observation is that most of the institutions are not ready. Though not surprising, most of them are ordinarily in poor state and Covid-19 has just exposed them. Beyond the situation, long-term actions are required to revamp and revitalise them.

Reopening the colleges in September will be the starting point for relaxing restrictions in the education sector. The reason for beginning with colleges is that they have mature students who understand the health protocols and can, therefore, take care of themselves and minimise infections. Their experience would then inform plans for reopening primary and secondary schools.

REPEAT CLASSES

Closure of schools and colleges has dealt a huge blow to education. Learners in schools have lost a whole year and have to repeat classes next year. This comes with high social, economic and psychological. Indeed, this is the first time in history that schools are being closed for a year.

The last time the education sector suffered most was in 1982, when, following an abortive coup, the University of Nairobi and then-Kenyatta University College were closed for nine months. That created a major backlog and that took five years to clear. This is the reason steps should be taken at the earliest opportunity to mitigate the damage.

The challenge, therefore, is for the colleges to work on those health protocols to prepare for reopening. All other sectors, such as transport and tourism, are reopening and, therefore, colleges have no reason to lag behind. We ask the management of the institutions to expedite the required processes and get ready for reopening in September as directed.

Loading...
Continue Reading

Trending