Kenyans rush to swap banknotes as cash ban looms

Kenyans were given to September 30 to exchange their old bills at the bank or be stuck with bundles of useless cash. (AFP)
Updated 27 September 2019

Kenyans rush to swap banknotes as cash ban looms

  • People with their fortunes stashed in cash are under pressure to find ways to jettison their money
  • ‘Four months is a short period of time when you want to launder big sums of money’

NAIROBI: Last week a man walked into a Nairobi car yard and paid for a luxury Mercedes with a mountain of 1,000-shilling ($10) banknotes, desperate to offload cash that within days would be worthless.
With a deadline looming before the Central Bank of Kenya bans all old edition 1,000-shilling notes, big fish with their fortunes stashed in cash are under pressure to find ways to jettison their money.
A new print of the 1,000-shilling banknote, the largest denomination, was rolled out in June, with Kenyans given to September 30 to exchange their old bills at the bank or be stuck with bundles of useless cash.
The operation is aimed at flushing out dirty money being hoarded by tax evaders, crooked businessmen and criminal groups.
Large deposits of the old notes, embossed with the image of Kenya’s founding father Jomo Kenyatta, raise alarm bells at banks and require paperwork to prove their origin.
The central bank in June said there were roughly 218 million 1,000-shilling notes in circulation, but declined to say what proportion was being stashed as black money.
Kenyan economist Aly-Khan Satchu said devaluing these bills works by “taking its owners by surprise.”
“Four months is a short period of time when you want to launder big sums of money,” he said.
“People who have that money will definitely try to save what they can.”
So, people are getting creative, devising schemes to quickly unload small amounts of their cash while avoiding detection by the authorities.
John, a car dealer in Nairobi, recalled his customer last week counting out thousands upon thousands of banknotes to purchase a luxury car worth $74,000.
“People want to get rid of their old notes, but they know very well that questions will be asked if they go put the money themselves in the bank,” said John, who declined to offer his real name due to the nature of his business.
“When I go to the bank to deposit money from a car sale, people ask for the papers from the sale, sometimes even copies of emails, but it never goes further.”
Other businesses are finding a lucrative side trade in washing 1,000-shilling notes through their tills — for a bit in return.
“I was approached by a friend through another friend and we struck a deal. I get around 500,000 shillings every day to bank together with my daily sales,” said a liquor shop owner who declined to be named in Hurlingham, a district near downtown Nairobi.
“In return I get between five and 10 percent, depending on the amount.”
The amounts being deposited are below one million shillings, the threshold at which banks required detailed paperwork under a new transparency policy imposed by the central bank in June 2018.
One canny businessman in western Kenya dished out his cash in the form of small, interest-free loans of around 50,000 shillings.
The amounts are low, so those exchanging the old bills avoid detection, and upon returning the debt his money is cleaned into new bills.
“Nothing is written down, it is a gentleman’s agreement,” he said, declining to be named.
Other methods involve sinking cash into real estate or investment funds, or businesses moving large volumes of money, several businesspeople said.
But it’s not all underhanded and hush-hush.
One bar in the coastal city of Mombasa is offering to swap banknotes on behalf of drinkers, encouraging punters to spend big at their “Old Notes Send Off Party” being held the eve of demonetization.


UK PM Boris Johnson locks down England as COVID-19 cases pass 1 million

Updated 31 October 2020

UK PM Boris Johnson locks down England as COVID-19 cases pass 1 million

  • Lockdown starts just after midnight on Thursday morning
  • United Kingdom has the biggest official death toll in Europe from COVID-19

LONDON: Prime Minister Boris Johnson ordered England back into a national lockdown after the United Kingdom passed the milestone of one million COVID-19 cases and a second wave of infections threatened to overwhelm the health service.
The United Kingdom, which has the biggest official death toll in Europe from COVID-19, is grappling with more than 20,000 new coronavirus cases a day and scientists have warned the “worst case” scenario of 80,000 dead could be exceeded.
Johnson, at a hastily convened news conference in Downing Street after news of a lockdown leaked to local media, said that the one-month lockdown across England would kick in at a minute past midnight on Thursday morning and last until Dec. 2.
In some of the most onerous restrictions in Britain’s peacetime history, people will only be allowed to leave home for specific reasons such as education, work, exercise, shopping for essentials and medicines or caring for the vulnerable.
“Now is the time to take action because there is no alternative,” Johnson said, flanked by his chief medical officer, Chris Whitty, and his chief scientific adviser, Patrick Vallance.
The government will revive its emergency coronavirus wage subsidy scheme to ensure workers who are temporarily laid off during a new England-wide lockdown receive 80% of their pay.
Essential shops, schools, and universities will remain open, Johnson said. Pubs and restaurants will be shut apart from for takeaways. All non-essential retail will close.
Johnson’s imposition of stricter curbs came after scientists warned the outbreak was going in the wrong direction and that action was needed to halt the spread of the virus if families were to have any hope of gathering at Christmas.
Johnson was criticized by political opponents for moving too slowly into the first national lockdown, which stretched from March 23 to July 4. He fell ill with COVID in late March and was hospitalized in early April.
The measures bring England into alignment with France and Germany by imposing nationwide restrictions almost as severe as the ones that drove the global economy this year into its deepest recession in generations.
So far the United Kingdom has reported 46,555 COVID-19 deaths — defined as those dying within 28 days of a positive test. A broader death measure of those with COVID-19 on their death certificates gives the toll as 58,925.
The United Kingdom has the world’s fifth largest official death toll, after the United States, Brazil, India and Mexico, according to a Johns Hopkins University tally.