By the time the process came to a close on September 30, Central Bank of Kenya (CBK) data released yesterday showed, about Sh64 billion worth of the old notes were reintroduced to the formal banking system.
Most of the other pieces of the old Sh1,000 notes estimated at 149.7 million pieces, were replaced with new notes.
When the demonetisation process started, there were about 209 million pieces of the old notes, which have since been rendered useless.
During the process, Kenyans had the option of either replacing the condemned old notes with new ones or simply depositing them in banks.
This saw money outside of banks — in coins and notes — reduce by nearly a third from Sh222 billion in May to Sh157.7 billion, according to the latest data from the CBK.
In September, there was an unusual 26.4 per cent drop in money in circulation, the third month that there was a negative annual growth in currency outside banks.
In his Madaraka Day Speech on June 1, CBK Governor Njoroge noted that his team had concluded that the Sh1,000 notes were being used for illicit financial flows in the country and the region. He also declared that the demonetisation process was a success.
“As the sun set on demonetisation on September 30, 2019, inflation, the exchange rate and other key macroeconomic indicators remained stable,” said Dr Njoroge. “There were no last-minute panic queues outside banking halls. The awareness campaign had been effective and ordinary Kenyans had exchanged their notes in good time.”
Ninety days after the process was unveiled, unbanked money dropped by almost a third in what was seen as a pointer to desperation by Kenyans — some of whom had hidden their hard-earned and in some instances illicit cash, in their homes — to beat the September 30 deadline.
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