EDITORIAL: CBK must come to the rescue of rural consumers

Opinion and Analysis

Family Bank Banking hall. The bank Wednesday launched its Sh10 billion bond offer to support its fast growing loan book. PHOTO | FILE 

By BUSINESS DAILY

The Central Bank has fought hard to keep coins in circulation, but Kenyans are killing the cycle meant to retain the low denominations in the economy.

It increased the value of coins in circulation to Sh6.67 billion last year from Sh6 billion in 2013 and launched usage campaigns.

CBK assured the public that the country has adequate stocks of currency coins, warning supermarkets and banks against issuing alternative products like airtime, sweets and e-coins as change instead of currency, on the false excuse of shortage.

But it is traders in rural areas who are now failing to keep the coins cycle going, terming them worthless and bulky.

CBK launched a campaign three years ago, urging Kenyans to stop holding onto coins in cars, homes and workplaces to ensure there was an efficient mechanism of re-circulation.

But with traders in rural areas turning away buyers who have one-shilling coins, consumers have been forced to go back to their plastic container banks, hoarding the nickle-plated pennies, oiling them to protect them from rust, hoping that one day they can use them to trade.

The traders argue that the one-shilling coins have lost value. M-Pesa agents in some rural areas are also declining one-shilling coins, terming them cumbersome.

The traders’ refusal to take the one-shilling coins has pushed up prices of basic commodities and threatens to trigger another artificial coins shortage.

There are mixed reactions from economists on whether CBK should reconsider production of the coin.

Some argue that it’s too bulky and its value is less than the metal used to make it while others say having notes in small denominations in circulation would be expensive because they get torn easily.

As debate continues on whether to stop production of the one-shilling coin or not, CBK should come to the rescue of consumers in rural areas who are holding onto legal tenders that they cannot use.