Currencies

CBK defends quality of Sh50 banknotes

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Central Bank governor Dr Patrick Njoroge holding the new banknotes at a press conference on May 3, 2019 in Nairobi. FILE PHOTO | NMG

Central Bank of Kenya governor Patrick Njoroge has defended the quality of the new generation Sh50 notes amid complaints that they are wearing out too fast.

Dr Njoroge said the recovery rate of the banknotes — the proportion of clean notes pushed back into the economy after filtering out dirty ones from consignments received from banks — is within normal limits.

“The recovery rate for the Sh50 notes has stabilised at 11 percent, which indicates normalcy with respect to usage,” the governor told senators on Tuesday.

The lawmakers had raised concerns about the quality and durability of the new generation notes, which they termed poor.

Mr Njoroge said recovery rates ranging between 10 and 15 are normal, adding that the incidence of dirty banknotes had significantly dropped.

Dirty notes result from poor handling habits. The Sh50 and sh100 are most prone to wearing out fast as they circulate more than the other denominations, especially in matatus and markets.

“These notes are folded into tiny bits…even to eighths…and put in sweaty places or even in shoes,” said Dr Njoroge.

Due to the erosion of the value of the shilling, Kenyans have also reduced the usage of coins, which has put pressure on the lowest denomination of banknotes, which are utilised frequently in small-value transactions.

Vihiga Senator George Khaniri had demanded a report from the CBK through the House Budget and Finance Committee on the new notes in circulation.

Dr Njoroge said the notes unveiled during the 2019 Madaraka Day celebrations have superior security features, are better aesthetically and are friendlier to the visually impaired.

He added their lifespan is longer by three months compared to the older notes that would only last between six to nine months.

The CBK brought in the new generation notes on Madaraka Day in 2019, where it also announced the withdrawal of the old Sh1,000 notes in a bid to deal with counterfeits and money laundering.

But the old notes of other denominations of Sh500, Sh200, Sh100 and Sh50 continue to circulate alongside the new versions.