News and Analysis
November 21, 2024
The Central Bank of Kenya (CBK) has announced significant changes to the country's banknotes, marking the first major update since the new currency was introduced in 2019.
The CBK said in a statement released on Wednesday (07/08/2024) morning that these changes will affect the Ksh.50, Ksh.100, Ksh.200, Ksh.500, and Ksh.1,000 denominations. The changes will begin with the release of the Ksh.1,000 note, with other denominations to follow in the coming months.
The CBK has outlined four primary updates to the banknotes:
Signature of the Governor: The new banknotes will bear the signature of Dr. Kamau Thugge, the Governor of the Central Bank of Kenya.
Signature of the Principal Secretary: They will also feature the signature of the Principal Secretary of the National Treasury, Dr. Chris Kiptoo.
Year of Print – 2024: Each banknote will specify the year of print as 2024, distinguishing them from previous editions.
New Security Threads: To bolster anti-counterfeiting measures, enhanced security threads with colour-changing effects specific to each denomination will be incorporated.
The CBK clarified that while these changes represent an important update, the new banknotes will circulate alongside those previously issued. This continuity ensures a smooth transition and maintains public confidence in the currency.
Read Also: Govt is Hiring 1,495 Enumerators - Paying Up to Ksh2,300 Daily: How To Apply
The decision to update the banknotes aligns with the CBK's ongoing efforts to maintain high security and functionality standards for Kenya's currency. This is shown by the inclusion of seven advanced security features.
The new currency notes will feel distinct as you run your fingers over them. The words "Kenya," "1,000" value, and the "edge" will be well defined, allowing you to feel their texture.
When you hold up the new banknote to the light, you will see the watermark, which shows a perfect lion's head, the text CBK, and the value of the banknote.
According to the CBK, the security thread on the new banknote will appear as a continuous line when held up to the light and change colour when tilted.
When placed under ultraviolet light, the golden band on the lower left side of the note will show the value of the banknote.
The CBK’s mandate to issue currency is enshrined in the Constitution under Article 231 (2), which entrusts the CBK with the responsibility to issue currency.
Additionally, Section 22 (2) of the Central Bank of Kenya Act gives the CBK the authority to determine the characteristics of the banknotes and coins it issues. This includes denominations, inscriptions, forms, materials, and other characteristics, all in consultation with the Cabinet Secretary and to be notified in the Gazette and other public information media.
Read Also: All You Need to Know About Precast Construction in Kenya
Kenya's central bank cut its benchmark lending rate by 25 basis points to 12.75% on Tuesday, marking the first reduction in four years. This move comes as the Central Bank of Kenya (CBK) seeks to gradually ease its policy stance while ensuring continued exchange rate stability.
"The Monetary Policy Committee (MPC) noted that its previous measures have lowered overall inflation to below the midpoint of the target range, stabilised the exchange rate, and anchored inflationary expectations," the central bank said in a statement. The MPC emphasised its commitment to closely monitoring the impact of these policy measures and developments in the global and domestic economies and stands ready to take further action if necessary.
The decision to cut the rate follows two consecutive monetary policy meetings where the Central Bank Rate was left unchanged. This rate cut reflects easing inflationary pressures, with Kenya's annual inflation rate falling to 4.3% in July from 4.6% in June.
The CBK Governor Kamau Thugge, who also serves as the chairman of the MPC, reiterated the central bank's stance, stating, "The MPC concluded that there was scope for a gradual easing of the monetary policy stance, while ensuring continued exchange rate stability."
The rate cut comes at a critical time for the Kenyan government, which is struggling to raise revenue and service its public debt amidst recent protests over tax hikes. President William Ruto scrapped the deeply unpopular tax increases introduced amidst a cost-of-living crisis. These tax hikes were initially meant to reduce public debt and fund new developments.
Adding to the fiscal challenges, Kenya's Court of Appeal annulled the controversial tax hikes adopted in 2023 at the end of July due to procedural issues.
Read Also: How to Revive Your 2024 Financial Goals in Simple, Practical Steps
According to the Stanbic PMI Report, Kenya's business environment faced a significant downturn in July, reflecting a sharp decline in private sector performance amid anti-tax protests and civil unrest in June. The Purchasing Managers’ Index™ (PMI®), a key indicator of business conditions, dropped notably to 43.1 in July from 47.2 in June, signalling a marked deterioration in the Kenyan private sector’s performance.
The report reveals that disruptions caused by ongoing protests led to a rapid fall in output and new orders. Many businesses experienced operational interruptions, with some unable to open or access necessary resources due to unrest. This resulted in a significant reduction in production and new business opportunities, with the PMI indicating the most severe contraction since April 2021.
The political unrest hindered companies' ability to fulfil new orders and impacted the supply chain. The report found that delays in receiving goods from suppliers and the accumulation of backlogs of work became prevalent. Suppliers' delivery times were extended for the first time in ten months, and the backlog of work grew to its highest level since March 2023.
In terms of cost pressures, input costs rose for the second consecutive month, influencing a further increase in selling prices. Despite this, the pace of inflation remained subdued compared to the high rates observed throughout 2023. Purchase prices surged again due to elevated living costs and taxation, though the overall inflation rate was still notably lower than the previous year's peaks. Staff costs also saw a marginal increase.
Business activity was notably affected across most sectors, with agriculture experiencing the most pronounced decline. Manufacturing was the only sector that reported an increase in output. Companies in the service and construction sectors also felt the brunt of the downturn, reflecting broader economic challenges.
The report highlights decreased purchasing activity and inventory levels as companies adjusted to the challenging conditions. Despite these reductions, employment continued to rise, albeit slower. The rate of job creation slowed to its lowest point in a seven-month streak of increasing staffing levels.
Business confidence suffered significantly, reaching its second-lowest level on record, only marginally above the previous low set in February. The subdued outlook for future business activity is linked to the current instability, though some optimistic firms anticipate improvements through plans to expand or open new branches.
.png){kind=small}
Join 1.5M Kenyans using Money254 to find better loans, savings accounts, and money tips today.
Money 254 is a new platform focused on helping you make more out of the money you have. We've created a simple, fast and secure way to find and compare financial products that best match your needs. All of the information shown is from products available at established financial institutions that our team of experts has tirelessly collected.
