Kes10.3 billion worth of coins in Kenya. Who is using them as Mpesa is accepted everywhere?

4 minutes

This week, while rummaging through the Central Bank of Kenya (CBK) website, hoping to squeeze a juicy story out of the financial regulator’s data, I came across some interesting information. 

Apparently, there were coins worth Sh10.3 billion in circulation by the end of last year.  

This got me thinking: Who is using these coins?

For a lot of Kenyans, especially our wash-wash brothers and sisters, cash is still king.

Indeed, a recent survey done jointly by CBK, Kenya National Bureau of Statistics (KNBS) and FSD showed that the use of cash in payments from customers remains very high at 98.5 percent followed by mobile money (send money) at 76.4 percent

The rural economy, for example, is largely cash-based with mobile payments yet to take hold among farmers and pastoralists. 

But I stopped carrying cash around the moment matatus started accepting M-Pesa, a mobile money payment service owned by Safaricom, a telco.

This marked the disintegration of the last vestige of cash for me, and my trips to M-Pesa agents have since then significantly reduced. 

After initial resistance, today nearly every matatu accepts mobile money payments for payment of fare.

A lot of financial journalists and analysts might not have kind words for the former CBK Governor Dr Patrick Njoroge, but the no-nonsense economist was truly a champion for Wanjiku (remember him quipping: ‘Kenyans can’t eat GDP?’).  

His decision to push for the waiver of fees on transactions for sums of the first Sh1,000 and below before lowering this down to Sh100 and below has totally changed the digital payment landscape. Today, Kenyans pay for their matatus or groceries from Mama Mboga or bread from a shopkeeper using their mobile phones. And it is free as long as it is less than Sh100.

Consequently, the amount of money transacted on mobile phones crossed half of all the goods and services produced in the economy, or gross domestic product (GDP) for the first time in 2021, CBK data shows.

This might be devastating for the Sh10.3 billion worth of coins which might continue piling up in cookie jars with a lot of Kenyans opting to use their mobile phones for transactions.

In addition to the threat of Inflation, (what can a 50 cent coin buy today?) technology also threatens to consign most of these coins into oblivion. Even as Kenyans pay using mobile money transfer services, there are a lot of cashless payment innovations being rolled out specifically for Public Service Vehicles (PSVs) further threatening these coins.

Acceptance of mobile payments by touts has not been smooth-sailing. At first, I had to have cash on me just in case a tout rejected an M-Pesa payment. The reasons for the rejection varied from reversal by passengers to the need for customers to also include withdrawal fees.

Today, when I get into the Matatu I am not worried about not having cash in my physical wallet but not having money in my M-Pesa wallet.

Over the years, coins such as 5cents, 10cents, 25cents have been consigned into oblivion by the spectre of Inflation—the overall increase in prices of products in the economy.

Increased prices have meant that there is nothing in Kenya that is priced in cents.

But the cents are not totally gone. The CBK data showed that the coins in circulation included Sh1, Sh5, Sh10 and Sh20 and 50 cents.

Yes, there are 137 million pieces of useless 50 cents coins out there. They are useless because, although they are still legal tenders, no one will accept 50 cents in a transaction.

And I doubt CBK would respond strongly as they did sometime in 2015 when it emerged that some supermarkets and banks were offering customers alternative products— sweets, matchbox and airtime—as change instead of currency coins.

Generally, the 50 cents coin will capitulate to the force of Inflation. Unlike in 1963, for example, when a 50 cent coin could buy you 454 grams of unsifted Maize Flour (Posho) or a similar quantity of maize grain, that coin can’t buy you anything today. Indeed, there is nothing that is priced in multiples of 50 cents anymore.

It is safe to say that it is just a matter of time before a 50 cents coin joins  5 cents, 10 cents, 25 cents, and 2 shillings in the dustbin of condemned currencies.

But the other coins —Sh1, Sh5, Sh10 and Sh20—are also under threat, not only by inflationary pressures but mostly by technology.

Why would I need to carry bulky coins, when I can put all my money in my mobile wallet? Safety? 

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