BUSINESS UNUSUAL

CBK directive hits Kenya/Uganda cross-border traders

Neighbouring countries have stopped use of Kenya currency to guard against laundering

In Summary

• Uganda and Tanzania have stopped the use of the Kenyan currency in an effort to shield its banks from being used to launder stolen money back into Kenya.

• Cross border traders now flock to them to exchange the currencies.

CBK governor Patrick Njoroge./
CBK governor Patrick Njoroge./
Image: COURTESY

Kenyan traders who source their merchandise from Uganda have been affected by the Central Bank of Kenya's (CBK) currency directive.

Uganda and Tanzania have stopped the use of the Kenyan currency in an effort to shield its banks from being used to launder stolen money back into Kenya.

This follows the CBK's announcement  that in intends to withdraw the old Sh 1,000 notes from circulation starting October 1 to combat illicit financial flows and counterfeits.

 

Traders who usually cross into Uganda via Busia border, Marenga and Mulukoba beaches in Port Victoria town to buy goods said it is no longer business as usual as banking institutions in the neighbouring country no longer accept Kenyan currencies.

“The introduction of new notes by the Central Bank of Kenya and the announcement that the old a thousand shilling note shall cease to be in circulation by October 2019 has affected the free flow of trade between Kenya and Uganda." said a cross border trader.

On the other hand, CBK's action is a blessing to the local money changers as tit has led to booming business.  Cross border traders now flock to them to exchange the currencies.

Hassan Waswa, a longtime money changer operating at Marenga beach said he has not received any new notes, but following CBK's announcement he is handling more clients than before.

Busia County Business Owners Association chairman Steven Obala said Uganda is refusing to accept the old Kenyan currencies for fear that the country may incur huge losses should the banking institutions in Kenya decline to exchange the money into Uganda currency.

He said most affected by the neighbouring country’s move are Kenyan traders crossing the Busia-Uganda border to buy goods with huge sums of money.

“Uganda is refusing to accept Kenyan currencies because it is very difficult at this partcular time to to differentiate between genuine and fake money, aid Obala

 

This, he said, has forced Kenyan traders crossing into the neighbouring country to go through a lot of challenges

He said Kenya should engage Uganda and Tanzaia and agree on a more practical way to handle the transition from the old to the new Sh1,000 notes.