June 1st 2019, during the 56th Madaraka Day Celebrations, President Uhuru took the opportunity to launch a new currency which will automatically trash the existing old styled note. This move was taken to mitigate corruption, make onerous the creation of counterfeit notes as well as to curb tax evasions and frustrate and trash terrorist cash flow. For the most part, the president was trying to fulfill his promise on fighting corruption by whatever means necessary.
Demonetization is not a new strategic move. It has been implemented before by even massively populated countries like India, Nigeria, Australia among others.
India's demonetization
On Nov 8th 2016, India trashed its Mahatma Gandhi 1000 and 500 notes and replaced them with new 500 and 2000 new generation notes to curb what Modi's government termed as, "black economy" also known as shady economy.
The repurcusions
In a country with 1.3 billion people, this move was going to significantly hurt the economy with majority of poor citizens to suffer the most. India's Prime Minister, Narendra Modi caught the nation unawares after he announced that the current circulating India's currency would be worthless papers in 50 days unless exchanged with the brand new currency.
He stated that the exercise, "will be 50 painful days". He stated that the move was all for the betterment of the India's economy. The pain went from the initial projected 50 days to a whole year deluge!
What followed was a frantic bustle where people flocked into banks, forming endless ques stretching down the streets as they rushed to swap their money before the deadline hit! Banks ran out of money in minutes. Chaos, worry and stress resulted and the whole thing got worse.
The critics
However, critics said that the money cartels who operate black markets where most tax evasions occur, hold their money in valuable metals like gold rather than cash. This is the worst nightmare for demonetization.
Critics claimed that, of the 86% of currency in circulation, only 6% of it was in the hands of black market cartels. This is a legit worry even for Kenya! India's population is dependent on cash more than any other nation in the world. 85% of the 1.3 billion people transact with cash only. The low circulation of cash in such a vast nation would result into a mega financial situation.
Plastic money is not regularly used in India and the trivial percentage of people with debit cards use them to withdraw cash from ATMs. This is almost the same case with Kenya. Majority of people use cash for daily transactions. For this reason, banks in India were otherworldly crowded with people looking for cash for daily use and in some cases, deaths,muggings and serious injury connected with overcrowding were reported.
Why Kenyans should worry
The old currency is still a legal tender until October 1st,2019 and it's circulation around the country is very efficient. However, the new currency is still in its initial roll out and its just a matter of time before banks will start experiencing shortages.
The percentage of current circulation versus the percentage release of the new currency should be matched so as to have a normal balance of cash flow around the country without affecting trade and businesses.
CBK cannot afford to make a mistake with in this respect. They must provide the country with enough cash. Otherwise, Kenyans will suffer insufficient circulation of funds consequently affecting everyday business. This will have significant negative effects on the economy which is currently grappling!
Last minute Kenyans
Kenyans, as usual, will rush the last minute to their local banks trying to get the legal tender before it becomes worthless pieces of paper. This will cause another surge in banks and if it gets worse, and it sure will, your local bank will run out of money! This means most Kenyans will end up having millions and thousands of worthless papers well beyond the deadline. Trust me, this is bound to happen!
Mzee Jomo Kenyatta
The ongoing tiff about Mzee Jomo Kenyatta portrait is baloney and should be ignored. Treat it as how we treat most of Kenyan artists- unnecessary noise! Our constitution was not amended to fit the country needs. In fact, we are a country that literally make laws just to break them.
The current constitution states that, "no individual or person's portrait" should be printed on public notes. But as usual, no one cared about this. No one thought that our founding father who is part of Kenyan history as spots are to the leopard, cannot be ignored.
We cannot fault our country's history just because we can't get along. That's insane! The constitution needed to be changed to fit our country's needs!
These are some of the parts that were supposed to be changed and some other entire paragraphs required to be shredded and especially the entire chapter that caused the lunacy of over-representation! We don't need over 400 politicians! We are not India!
'Gunia' money
Upon deadline, all the old currency will cease to be legal tender rendering it less value than a souvenir. All people with, 'gunia', money will have to come out and explain their millions. All the terrorist stashes will be worthless and counterfeits will be nabbed by CBK. That is if people responsible will do their part thoroughly which as usual, is highly unlikely!
What bothers me a lot is why thieves and criminals have been given so much time to figure out other means to still make their,'gunia' money worthwhile. The stolen billions stashed somewhere two-feet below the floors and walls needs a lot less time so that it will be difficult for the culprits to find lee ways. But as obvious, the strategy was not made to frustrate thieves.
The deadline should be brought closer to the end of July or even earlier if fighting corruption was really the core reason as to why demonetization was executed!
According to CBK, any money more than Ksh 5 million must be approved by the Central Bank of Kenya. While doing this, the government should take this opportunity to audit the credibility of wealth of all politicians old and new as well as the opulent 'businesspersons' in this country.
Will it work?
Demonetization only will not work if the government will not put forth additional reforms to curb corruption, tax evasion and terrorist cash flow.
The move may temporarily cease these crimes but will eventually be on the rise again. India has changed its currency on three occasions, once in 1946, 1978 and recently in 2016 while trying to disrupt and stop black economy. It's still not a guarantee that it will work!
It will not be surprising if by the end of the next decade the effect of this strategy undertaken by President Uhuru will render zero effects.
Money laundering will continue, corruption will be uncontrollable, terrorist will now store money in terms of gold and still have the new currency in billions, and tax evaders will resume, 'business', as usual! Copy and paste this because you will remember that I said so! It's like the words of the Savior, "Behold I have told you before".
As annoying and scary as it sounds, it's still not going to be a surprise!
Finally...
Its time this country accept that we lack an ethical think tank. We lack people with vision. We lack elite policy makers. People who can see at least 20 years from now!
We lack leaders. We lack the best of best, the brained managers who can sit and figure strategy and policies that can take this country to the next level of industry and well being.
American constitution was made in 1776 and only with a few amendments, it continues to serve the people of the United States centuries over and over! It is these kinds of brains that we need now -The visionary kind if brains!
What we have now are thick minded politicians who stealing is a virtue, foolishness is a talent and mediocre politics is their oxygen!
If you tell our politicians to shut up and work they will literally die one by one. They cannot shut up and they cannot work either! They can talk, that's for sure, but work? They don't know how!
They are people who react only after a disaster has occurred and alongside, are poor ignorant voters who think mtu-wetu and fights bitter wars defending mtu-wetu!
With that kind of portfolio, I feel sorry for this beautiful nation that has been turned into a banana republic by less than a thousand people in the name of politicians and government officials!
If you hear revolution booming, do not just follow the throng singing mtu-wetu amesema , ask if there is anything for the ordinary citizens! And while you think about that, go exchange your money now before its too late!
If you have nothing to exchange blame your county leaders and exchange all of them come 2022!