Data published by the Central Bank of Kenya (CBK) shows that the metric which is a blunt measure of the economic times of a country grew by Sh14.8 billion (6.2 percent) from Sh238.6 billion.
The rising value of cash outside the banking system is an indicator of economic recovery as Kenyans increased their spending for December and reopening of schools for the third term.
The CBK data shows that demand deposits — cash available for withdrawal in banks — increased by a paltry Sh1.69 billion to hit an all-time high of Sh1.49 trillion.
Cash circulating outside the banking system hit an all-time high of Sh253.4 billion in December last year as Kenyans went into the festive period.
Data published by the Central Bank of Kenya (CBK) shows that the metric which is a blunt measure of the economic times of a country grew by Sh14.8 billion (6.2 percent) from Sh238.6 billion.
The rising value of cash outside the banking system is an indicator of economic recovery as Kenyans increased their spending for December and reopening of schools for the third term.
Improved consumption brought by increased confidence and income as a result of new hirings and removal of containment measures aimed at combating the pandemic have lifted the economy recover thereby increasing peoples’ disposable income.
“There is continued optimism about business activity and economic growth prospects for this year attributed to continued recovery of key sectors supported by government stimulus programmes.” Said the Central Bank in the monetary policy committee statement.
The Central Bank of Kenya (CBK) in the market perception report indicated that 33 percent of the respondents in the survey expected their companies to hire this year due to increased demand as businesses return to normal levels.
The CBK data shows that demand deposits — cash available for withdrawal in banks — increased by a paltry Sh1.69 billion to hit an all-time high of Sh1.49 trillion.
The rise in demand deposits indicates many people were looking to have their cash within easy reach for spending during the Christmas and New Year period and also as schools reopened.
On the flip side, long-term deposits fell to a 7-month low of Sh1.58 trillion as commercial banks paid an average of 6.3 percent interest on customer deposits last year a slight drop from 6.7 percent averaged in 2020.
The returns have encouraged more liquid cash to leave the banking system to the pockets of individuals and businesses for investment in other portfolios promising better returns.
Cash circulation fell to a low Sh194 billion in April last year as the country was going through its first wave of infections a period that witnessed massive job losses, business closures and widespread panic.
