Kenya's firms face dilemma as old bank note deadline nears

Kenya's enterprises, especially those handling large sums of cash daily, including retail stores and wholesalers, are facing the dilemma of when they should stop accepting the old generation Ksh1,000 note, which will cease to be legal tender from Oct 1.

While some enterprises have set a date for when they will stop accepting the old note, others have yet to make an ultimate decision. The possibility of banking all the old notes before the end of the deadline is also a concern to many traders.

Having issued the directive to withdraw the old notes in June, the Central Bank of Kenya is not backing down on the deadline. The banking sector regulator has embarked on a mobile phone-based SMS campaign reminding people to return the old Ksh1,000 notes.

"Old Ksh1,000 notes will be worthless after Sept 30. Exchange them now," the SMS reads.

Businesses, specifically supermarkets and wholesalers, are thus in a tight spot on whether to stop accepting the old note days before the deadline to avoid being caught with large sums of worthless cash or how they will handle the sales of the last day of trading with the old note.

Kem Stores Limited, a Kiambu county-based wholesaler and distributor of cotton canvas, buttons, fasteners, webbing material, interlining, buckles, collar felt, zippers and sliders, among others, said they will probably stop taking the old generation Ksh1,000 note on Sept 29.

"We have yet to decide on when we will stop accepting the old Ksh1,000 note because customers are still using them and we can't chase them away. Probably, we may stop accepting the note a day before the deadline," one of the senior staff from the company said in a phone interview.

Tuskys supermarket, one of the leading retail stores in Kenya, has instructed bank managers and cashiers in all its branches that Sept 29 will be the last day to accept the old Ksh1,000 note.

According to a bank manager in one of its branches who sought anonymity because he is not authorized to speak for the supermarket, the sales volume of the old generation currency has reduced significantly.

"Currently, we are receiving about 100 to 200 notes of the old Ksh1,000 from customers, totaling Ksh100,000 ($1,000) or Ksh200,000 ($2,000) which is low compared to our daily sales of Ksh800,000 ($8,000).

Most of the traders in Gikomba market, the biggest secondhand clothes and shoes market in Kenya, have set Sept 20 as their last day to accept the old currency.

"I suspect that in the last week of September there will be long queues in the banking halls as people return the old currency and some may not be served by the closing hours on Sept 30. I won't take the risk, so from Sept 21, I will not accept the old Ksh1,000 note," said Lydia Mwikali, a businesswoman at the market.

In Eastleigh, a shopping center in the eastern part of Nairobi featuring shopping malls that stock imported clothes and accessories, a place where millions of shillings are handled on daily basis, most of the traders have set Sept 22 as the deadline to accept the old note.

Kadijah Mohammed, a shop owner in one of the clothing malls, said she won't accept the old note after Sept 22. Her average daily sales amount to over Ksh100,000 ($1,000).

President Uhuru Kenyatta launched the new currency notes on June 1, during the 56th Madaraka Day celebration. The demonetization process is aimed at addressing illicit financial flaws in Kenya.

Unlike the old generation notes that featured portraits of the first three presidents on the face, the new ones, which are smaller in size, bear the image of the iconic Kenyatta International Convention Center and a statue of the founding President Jomo Kenyatta's monument.

The new Ksh50, Ksh100, Ksh200, Ksh500 and Ksh1,000 notes also bear respective images that symbolize green energy, agriculture, social service, tourism and governance at the back.