Editorials
EDITORIAL: Consider low-value notes for unpopular Sh1 coin
Monday, October 7, 2019 21:59
By EDITORIAL
Reports that majority of shoppers and retailers are rejecting Sh1 and 50 cents coins are, to say the least, unsettling.
Of the eight qualities that economists say an ideal currency should have, coins beat notes in terms of durability and divisibility while notes may only be superior when it comes to portability.
And in an economy such as ours, where majority of the population falls in the low- and middle-income categories, coins should generally be the king of transactions, enabling households to buy.
To be sure, the economy has plenty of low-value coins for that purpose.
Data from the Central Bank of Kenya (CBK) shows that a total of Sh833 million worth of Sh1 coins and Sh137 million worth of 50 cents coins are in circulation.
But, apparently in keeping with the 21st century’s preference for convenience, shoppers are increasingly opting for portability in notes rather than use the bulky coins in transactions.
This has not only rendered nearly Sh1 billion worth of low-value currencies idle but is also fuelling a wave of price increases as retailers set prices in multiples of fives and tens.
In short, the true weight of the tonnes of Sh1 and 50 cents that Kenyans have stocked in homes, cars and work places are falling heavily on the low-income earners who must buy goods at higher prices.
The middle class is equally affected.
A pump attendant may display a price tag of Sh121 per litre but will force buyer to accept more fuel by paying up to Sh150 or Sh200, simply because these figures are rounded off, not because that is the fuel a customer wants to buy.
A supermarket may have a product valued at Sh497 but ask the buyer to pick up sweets in place of the Sh3 change.
The CBK must find a way of putting back to circulation the nearly Sh1 billion being rendered unusable by shoppers and other outlets.
The regulator ought to consider low-value notes, starting from Sh1 just like the US has $1 notes, to ensure the close to Sh1 billion trapped in Sh1 and 50-cent coins is redeemed.
