The stringent measures comes a year after president Uhuru Kenyatta’s administration declared a battle on graft. Since then, the government has prosecuted dozens of current and former officials for abuse of office, conspiracy to steal public funds, and fraudulent compensations claims for land use. Yet activists and watchdog groups say the anti-corruption efforts are unlikely to work with indictments and prosecutions being weaponized to partisan ends for the 2022 elections.

So far, the central bank directives have received support from various outfits including public accountants and the private sector association, who say the demonetization process will be good for fiscal health, will bring more liquidity into the economy, and curtail the underground economy largely hidden from the financial system.

Displaying the new notes.
Displaying the new notes.
Image: REUTERS/Baz Ratner

Yet whether that will work isn’t known, with some analysts saying the move grants a “quiet amnesty” to illicit dealers who might use the banks and other proxies to beat the system. Kenya follows in the footsteps of India, which in November 2016 made all Rs 500 ($7.2) and Rs 1,000 ($14.4) illegal. While the initial objective was to crack down on illicit money and push more people towards digital transactions, research showed hoarders found ways to change their old bills for new ones while Indians’ love affair with cash continued.

Njoroge said they have learned from India’s mistakes, and that he was engaging with banks, forex bureaus and payment providers in Kenya and across the region to ensure the move was a success.

For all their mitigating efforts, the new banknotes are already facing their first challenge in court. In two separate cases, petitioners are challenging the bank’s issuance of the new currency before involving the public before. They are also questioning the decision to use first president Jomo Kenyatta’s portrait in the 1,000 notes, given that Kenya’s constitution dictates currency only “bear images that depict or symbolize Kenya” and not images of individuals.                         ,,,,,,

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