The Central Bank of Kenya stated that according to data collected during this coronavirus period, billions of Kenya shillings was circulating outside banks. This shows that Kenyans are keeping money in their pockets, instead of taking it to their local banks and SACCOs.
Kenya shillings 194.5 billion was recorded in April and 197.8 billion in May. This constitutes a 4.5-billion-shilling rise from the earlier month of January and February, which was 192.4 billion and 195.1 billion consecutively.
There has been a sharp decrease in business activities in the country due to Covid-19. Money has, therefore, not been in circulation. This is further attributed to closed schools and higher learning institutions, closed bars, and a decrease in inter-county travel.
Many Kenyans have also been on unpaid leave or have faced job losses due to the pandemic.
An average Kenyans’ purchase power has sharply declined as the uncertainty of the future prompts them to save more and spend less on non-essential products. Manufacturing and distribution firms have also complained that there is a sharp decline in demand for their goods and services since the beginning of the pandemic.
The money in accounts termed as demand deposit accounts increased sharply by 60 billion. The money in these accounts is kept temporarily on most occasions and is available on request.
Due to the country’s uncertainty, most people are dealing with hard cash kept in safes at home. Some are saving their money in their mobile money, such as Mpesa, Mshwari, or airtel money.
Another indication that money is not in circulation is evident in the decline of electricity consumption by commercial and industrial consumers. This shows that such firms have cut back in the manufacture of goods. It also indicates a decrease in workers present in the retail spaces.
The Sh197.8 billion is recorded as the second-highest ever recorded, only second to May 2019 when the CBK retired 1,000-shilling banknotes.
Most people remain in a state of panic and uncertainty as the Covid positive numbers keep rising daily.