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Directive on cash causes confusion

Zachary Ochuodho @zachuodho

Three weeks after Central Bank of Kenya (CBK) announced the release of new banknotes into circulation, confusion continues to reign, dampening the euphoria which greeted the launch.

Already landlords – who usually accept cash –  are warning tenants against paying rents with old notes, while some traders too, are exerting pressure on consumers to use new currency notes when buying goods.

The messages emerged after word went around that some unscrupulous money dealers are releasing counterfeit Sh1,000 notes into the economy in a bid to beat the October 1 withdrawal deadline set by the government.

This is what has triggered the panic and disquiet among small and medium enterprises (SMEs) and landlords – who are usually the first victims in case anything wrong happens.

Dirty money

Two landlords who spoke to People Daily on condition of anonymity, said they  are just taking precaution to ensure the real estate sector is not made the  site for cleaning dirty money.

In 1990s and part of 2000s, critics used to argue that a lot of funds, especially from the black money, found their way into the property sector, where they were being cleaned.

“Kenya property market, it is argued prospers on black money. CBK’s demonetisation move has woken up shady dealers from their slumber and unless traders and landlords up the game, they will be the ultimate sufferers,” John Mutiso, head of Realtor Ltd said.

He said that most landlords fear being used by holders of fake currency notes as they look for ways to beat the October 1 deadline, adding: “To avert the problem from hitting the real estate sector, landlords want tenants to pay in new currency notes.”

Hezbourne Ong’elle, Breinscope Consultants Ltd CEO argued that although the move by CBK to demonetise Sh1,000 notes is good, there are far-reaching effects embodied in the sudden withdrawal of a currency .

 These effects, he added are particularly noticeable in rural areas which are removed from the realms of banking, credit ratings, and national economic forecasts.

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