Kenya Insights

Tag: CBK Governor

  • Kenya To Add Gold to Its Reserves, Reduce Reliance on US Dollar, Says CBK Governor

    Kenya To Add Gold to Its Reserves, Reduce Reliance on US Dollar, Says CBK Governor

    The Central Bank of Kenya (CBK) is “actively considering” adding gold to its foreign exchange reserves as part of a strategy to diversify beyond the US dollar and other currencies, according to Governor Kamau Thugge.

    Speaking on the sidelines of the International Monetary Fund and World Bank Spring Meetings in Washington DC, Governor Thugge revealed that a dedicated team is currently examining the feasibility of gold acquisition, though he declined to provide a specific timeline for implementation.

    “We have basically a group that is looking at the feasibility of doing it and yes, that’s something that we’re actively considering,” Thugge told Bloomberg Television in an interview on Thursday.

    The move aligns Kenya with a growing global trend of central banks stockpiling gold, which has driven precious metal prices to record levels.

    This worldwide rush toward gold began in early 2024, as central banks sought to hedge against dollar fluctuations and protect themselves from potential sanctions.

    In the same interview, Thugge disclosed that Kenya is pursuing a new IMF program “in the same format as the previous one,” valuing the concessional element of the funds and the attached policy package as “a good package in the current context of elevated global risks.”

    This follows the premature termination of a four-year $3.6 billion IMF program in March, which resulted in Kenya forgoing approximately $850 million after failing to meet certain targets.

    The governor expressed optimism about Kenya’s economic outlook, projecting growth “at a much faster pace” than last year’s estimated 4.6%, despite potential headwinds from US trade policies.

    He anticipates that US tariffs on trading partners would only reduce Kenya’s economic growth by about 0.2%.

    Thugge attributed the expected economic expansion to favorable weather conditions boosting the agricultural sector, combined with lower interest rates stimulating investment and consumption.

    “Last year’s pressures have eased, and we have started to ease monetary policy,” he noted.

    Regarding financing strategies, the governor indicated that Kenya isn’t “planning and expecting to go to the international capital markets for a while” following a recent Eurobond issue.

    Instead, the nation plans to leverage its “deep local financial market” and explore loans from other regions, including the Middle East.​​​​​​​​​​​​​​​​

  • CBK Announces New Changes On Banknotes

    CBK Announces New Changes On Banknotes

    The Central Bank of Kenya (CBK) has embarked on plans to release new banknotes into circulation to replace the 2019 series.

    The regulator says the new release will affect the Ksh 50, Ksh 100, Ksh 200, Ksh 500 and Ksh 1000 banknotes.

    According to CBK, the new notes will bear the signature of CBK Dr. Kamau Thugge who succeeded Dr Patrick Njoroge whose signature appears in current notes in circulation.

    The rest of the features remain the same as those of the series issued in 2019. All banknotes currently in circulation remain legal tender and will circulate alongside the released banknotes,” said CBK in a statement.

    The new notes will also bear the signature of the National Treasury Principal Secretary Dr Chris Kiptoo, the year of print – 20204 and a new security threads with colour changing effects that are specific to each denomination.

    “Release of the banknotes will commence with KES 1,000, while
    other denominations will progressively follow in the coming months,” said the regulator.

  • MPs Launch Probe Into CBK’s Secret New Banknotes Printing Deal With A German Firm

    MPs Launch Probe Into CBK’s Secret New Banknotes Printing Deal With A German Firm

    Parliament has summoned Central Bank of Kenya Governor Kamau Thugge to provide details about a contract signed with an undisclosed German firm to print the country’s new banknotes.

    The awarding of the tender to the German company was announced yesterday by the CBK governor, but details regarding the firm’s name, the tendering process, and the cost of the deal remain undisclosed.

    This development follows Kenya’s decision to shut down De La Rue, the local British printing subsidiary, due to a lack of new printing orders. Kenya purchased a 40 per cent stake in the company for £5 million (Sh. 820.5 million) in 2019.

    De La Rue ceased its currency printing operations in the financial year ending March 2023 and spent £15.1 million (Sh2.48 billion) to lay off more than 300 workers, pay lawyers, and write off its assets.

    The company stated that its exit was due to confirmation from the CBK that there was “no expectation of new banknote orders” for at least 12 months. Former CBK governor Patrick Njoroge mentioned in February last year that the country’s currency needs were “completely fulfilled.”

    Dr. Thugge, the new CBK governor, justified the decision to introduce new notes for all denominations as an essential step to address potential stockouts.

    “The notes we have are getting old, and therefore we need to get new notes. The reason we started with the Sh1,000 notes is that we project a potential stockout of those notes in July or August, so it was necessary to acquire new notes as quickly as possible,” he said.

    The National Assembly’s Finance and National Planning Committee seeks clarity from the CBK governor on several issues, including the name of the German firm, how the tender was awarded, and the cost to taxpayers for printing the new currency.

    “We will be meeting Central Bank of Kenya Governor Kamau Thugge over reports that a firm has been identified to print new banknotes,” said committee chair, Molo MP Kuria Kimani, regarding the directive for Dr. Thugge to appear before the Parliamentary committee next Tuesday.

    “I urge members to attend the meeting. Although we will be in recess, it is crucial to understand the details of this currency printing deal,” Kimani added. The committee has initiated a probe following the CBK’s hiring of the German firm.

    When questioned by the media about the deal with the undisclosed German firm, CBK Governor Thugge stated that the printing was being conducted by “one of the best firms” in Germany.

    The new notes will feature the signatures of Dr. Thugge and Treasury PS Chris Kiptoo. They will be dated 2024 and include new security threads with colour-changing effects specific to each denomination. CBK noted that the rest of the features will remain the same as those of the 2019 series.

  • CBK Projects The Shilling To Maintain Its Strength

    CBK Projects The Shilling To Maintain Its Strength

    The Central Bank of Kenya (CBK) says the country’s debt has dropped by Ksh 1 trillion on account of strong shilling and investor optimism.

    According to CBK Governor Dr Kamau Thuge, the Kenyan currency has gained more value over the US dollar after the country managed to offset the $1.5 billion Eurobond debts in February.

    A combination of feeble shilling and worsening balance of payment created a cocktail of crisis in Kenya’s fiscal space increasing overall public debt by Ksh 1.93 trillion as of December 2023.

    This saw the total stock of public debt jump to record levels of Ksh 11.1 trillion, raising concerns over the country’s debt sustainability.

    However, investor nerves were calmed in January when the government settled the Eurobond debt that was due on February, 10.

    This has managed to stem a steady slide of the Kenyan shilling, which was trading at 160.1 against the US dollar.

    Dr Thugge says the Kenya shilling is now trading at 130, and the regulator expects the local currency to continue with its value correction in the coming weeks.

    Thursday, the shilling closed the trading day at 131 against the Dollar.

    The CBK governor is also raising concerns over the rise in non-performing which has breached the 15pc mark, for first time in over a decade.

    Banks have seen a surge in bad loans due to the economic meltdown.

    The governor noted that Kenya expects a disbursement of $1 billion  from the International Monetary Fund (IMF) to boost foreign reserves, which stands at 3.77 months of import cover.