When the Central Bank of Kenya and the 42 commercial banks in the country shut doors to their branches Monday, all the old Ksh1,000 notes will cease to be legal tender.
The Ksh1,000 note is equivalent to about $10.
CBK Governor Patrick Njoroge says as soon as his computers are switched off at the close of business this evening, all the bank notes not yet converted will become worthless pieces of paper.
Many banks close by 4pm, which means that this will be the actual deadline and not midnight Monday.
The CBK says it will destroy all the old notes collected as the final stage in the four-month demonetisation process that officially ends Monday.
Analysts say the success of the process will be measured after the country gets the real picture of the total money in circulation, even as it becomes clear that it will be impossible to collect all the Ksh217 billion ($2.17 million) that the exercise was targeting.
The CBK caught the country off-guard on June 1 when it announced the demonetisation after secretly printing the new generation bank notes and quietly gazetting the laws to give the notes a legal backbone.
The Central Bank chose a public holiday to launch its attack, seeking to rid the country of dirty money, tax evaders, terrorist financiers, money launderers and deal with counterfeiters.
But with the deadline here with us, it is emerging that the only thing the CBK is sure to have achieved is replacing the old Ksh1,000 notes with the new ones in line with the Constitution.
It is also probable that CBK will end up with a hole on its books estimated to run into billions of shillings if nothing out of the ordinary happens Monday.
This is because Kenyans have been in no hurry to return the money despite the massive awareness campaigns.
WAR ON FAKES
Most companies and retailers have not been accepting the old notes towards the end of the grace period.
On Monday, those who do not want to lose their money will have to walk into a bank or a CBK outlet to convert or risk losing it.
In recalling the 217 million pieces of the old notes in a massive and expensive process that cost the taxpayer over Sh15 billion, the CBK had taken the war back to the doors of counterfeiters.
At the end of it, the bank hoped to suck back Sh217 billion, which represents 80 per cent of all the money in circulation, in a process that would redistribute it back in the economy.
So far there have been no arrests or prosecution of those caught with unexplainable wealth.
Either they had anticipated the June 1 action long before it came and converted the billions in US dollars before CBK came calling, or they opted to lose their loot.
BLACK MONEY
By September 1, only 24 people had walked into any of the commercial banks in the country with more than Ksh2 million ($20,000) to convert.
In fact, 99 per cent of those who converted the notes had Ksh1 million ($10,000) or less.
This means that either no one had more than the Ksh1 million ($10,000) or those who did decided to beat the system by breaking their loot into smaller amounts to escape the scrutiny of the CBK.
There was no rush and hardly did any bank witness scenes seen elsewhere in the world where panicked citizens arrived in banking halls with sack loads of money.
Mr Tony Watima, an economist, says that there is not much evidence of curbing black money through demonetisation, even if circulation of money is stopped as it has been done in Libya, Zimbabwe and India.
“This is because not all corruption income is necessarily cash income. In fact, majority of ill-gotten cash never remains idle, they are always locked in physical assets such as real estate, or high-value purchases, personal foreign travel and investment in unaccounted businesses,” Mr Watima said.
AMOUNT COLLECTED
The CBK has not been keen on giving statistics on the total value of money so far returned.
However by August, about Ksh100 billion ($1 billion) had been exchanged, which was nearly half of the Ksh217 billion ($2.17 billion) that was to be replaced.
In value terms, the CBK said 58 per cent of all the money exchanged by September 1 was less than Ksh500,000 ($5,000) while 75 per cent was less than Ksh1 million ($10,000).
The Kenya Bankers Association chief executive officer, Mr Habil Olaka, says the CBK does not have to print and issue new notes in the market to deal with the deficit, but it will have a better understanding of just how much money is out there in the market to inform its future decisions.
The KBA is the industry lobby that speaks for banks.
On its part, Kenya Forex Bureaus Association Chief Executive Officer Mohammed Nur Ali said it has been business as usual for members and the earlier anticipated spike in currency action by money launderers did not materialise.
