Public Hoards Coins in Kenya

By Richard Giedroyc, World Coin News August 22, 2011

This article was originally printed in Numismatic News.
>> Subscribe today!

The Central Bank of Kenya (CBK) is letting the public know the bank is not happy with the coin hoarding the bank alleges is going on in the African nation.

According to a July 10 AllAfrica.com report, Kenyans “keep a total of 2.5 billion shillings in coppers and silvers in their office drawers, car glove compartments, piggy banks, purses, old shoes, and cracked metal cups.” The CBK, the article says, “is not amused.”

According to information recently released by the CBK, the central bank has distributed 1.2 billion coins with a face value of about 4.8 billion shillings (about $54.4 million US) for the fiscal year ending in April 2011.

The report continued, “The central bank knows that 2.5 billion shillings [in value] irritating circular pieces of metal make a difference when injected back into the economy.

2012 Standard Catalog of World Coins 2001 to Date Up-to-date and accurate values for a vast selection of the most recent coins produced and sold by today’s World Mints. Get your copy today!

It is the kind of money that can build a fully-fledged hospital for instance.”

Teko Lokoyetum is the CBK Director of Currency Operations. In the July 10 AllAfrica.com report he says, “Of these coins more than half the pieces are being withheld or hoarded by the public while others are carried away by tourists as souvenirs.”

This appears to be the latest salvo in a continuing war between the CBK and what it tries to paint as a public that would rather hoard then spend the coins the bank provides into circulation. However, the bank concedes that “the Kenyan shilling has lost value so much so that even street beggars frown at being handed copper coins.” This may be the real reason why the coins are not circulating in Kenya.

Of course the article also emphasizes that “The cost of repairing torn pockets is higher than the value of the coins. Matters are further compounded by commercial banks that charge clients for depositing coins.”

Much further into the article the bank then shows its true intentions saying, “For these reasons the CBK is planning to demonetize (stop the use of) the 5, 10 and 25 cents and the 5-shilling coin.”

This is the direct opposite of what was announced about two months earlier. At that time Kenya was supposed to be preparing both new coins and bank notes that would comply with the new constitutional requirement that neither currency vehicle can portray an individual. At that time Assistant Finance Minister Oburu Oginga said it would take about 18 months to come into compliance with the new law.

Lopoyetum was quoted by the June 7 issue of Capital Business as saying, “We did a quick analysis and realized that [the] majority of Kenyans are holding coins in one way or another and our concern is that perhaps Kenyans don’t realize that as we (Central Bank of Kenya) continue minting more coins, we are spending much more of taxpayers’ money.”

Lopoyetum may reportedly be concerned with the high cost of striking more coins, however in parliamentary hearings two months ago, it was revealed through Assistant Finance Minister Oburu Oginga that a contract to print paper money was recently cancelled, then replaced with another contract with the same company that would cost even more to print the same notes.