Kenya: Money circulation hits Sh238bn on recovery

Cash circulating outside the banking system rose by Sh2.8 billion to Sh238.6 billion last November, a month after the night curfew was lifted, bringing the night economy back to life after 19 months of restrictions.

The latest data published by the Central Bank of Kenya (CBK) shows that the metric, which is a blunt measure of the economic health of a country, rose to a four-month high from Sh235.8 billion in October.

Improved consumption brought by increased income as a result of new hirings and easing of restrictions aimed at combating the Covid-19 pandemic has been critical in helping the economy recover, increasing disposable income of the population.

“Because of the pandemic most Kenyans with cash were continuously being forced to save or redirect their spending mainly because of the containment measures,” Ken Gichinga, the Chief Economist at Mentoria Economics said in an interview.

Phased easing of the pandemic restrictions such as reopening of schools, removal of the night curfew and return to full capacity by public vehicles have boosted economic recovery.

The Kenya National Bureau of Statistics three weeks ago reported a 9.9 percent expansion in the third quarter of last year and a revised 11.9 percent expansion in the second quarter this being the highest growth rate in over four decades.

Education and accommodation sectors, which were the hardest hit posted the biggest growths in the quarter at 64.7 percent and 24.8 percent respectively.

Cash circulation fell to a low Sh194 billion in April last year as Kenya was going through its first wave of Covid-19 infections a period that witnessed massive job losses, business closures and widespread panic.

The variable, which measures money in its most liquid form then struggled to go past the Sh220 billion mark until October 2020. It then recovered to hit an all-time high of Sh242 billion in July last year.