This archive report was first published on 21 July 2019.
Kenya's ambitious plan to combat money laundering and illicit financial flows by phasing out the Ksh1,000 ($10) banknote by October 1 is facing significant challenges.
According to sources, the Central Bank of Kenya has reduced payments to government ministries, departments, and agencies in the new generation currency.
"CBK staff have been told not to make any further payments to the government using the new generation currency," a government source revealed to The EastAfrican on July 21, 2019.
Commercial banks have reported a shortage of the new notes after configuring automated teller machines to dispense the new currency.
The Kenya Bankers Association attributed the shortage to the high demand for new banknotes, exceeding earlier estimates.
"Both old and new generation notes are legal tender and will continue circulating side by side for now and going forward old generation systematically withdrawn as new generation ones step up," Habil Olaka, the Kenya Bankers Association CEO, said.
However, the Central Bank's decision to withdraw the Ksh1,000 notes from circulation by October 1 is facing a legal challenge, with a court case filed by activist Okiya Omtatah scheduled to be heard on July 29, 2019.
