On November 21, 2018, columnist Bitange Ndemo argued that Kenya should rethink its dependence on physical cash as the Central Bank of Kenya prepared to spend Sh10 billion a year printing new-look currency.
Ndemo said the country was already far along the digital payments path because many Kenyans use mobile money and other forms of electronic value transfer. He framed that shift as an opening for the Central Bank to consider issuing digital currency instead of continuing to rely so heavily on notes and coins.
His argument was reinforced, he wrote, by comments from International Monetary Fund managing director Christine Lagarde, who had called on central banks to examine the idea of issuing digital currency. Lagarde said such a currency could support financial inclusion, security and consumer protection, while also offering privacy in payments that the private sector could not provide.
Ndemo also pointed to Lagarde’s view that central bank-issued digital money could strengthen financial stability by lowering the risk of bank runs. He quoted her as saying central banks should focus on “back-end settlement” while financial institutions and start-ups handle “client interface and innovation.”
The column tied the debate to wider questions about technology, productivity and economic growth. Ndemo said economists often treat technology as an outside factor, even though fintech and mobile money have already changed how people transact and how money moves through the economy.
He argued that a cashless system could bring several practical gains. In his view, digital currency would make it easier to formalise informal businesses, improve traceability, increase bank liquidity, raise tax collection and help authorities confront corruption. He also said reducing the amount of cash in circulation could lower crime.
At the same time, Ndemo acknowledged the risks. He warned that digital currency could be exposed to cyber-attacks and hackers could target unsuspecting users. He said those dangers could be reduced through technologies such as blockchain.
Ndemo concluded that adopting a cashless economy would be a rare opportunity to reshape Kenya’s economy for long-term prosperity.
