Rich Kenyans Avoid Local Currency And Sitting On Sh1.4 Trillion

Central Bank of Kenya (CBK) data reveals that Corporates and wealthy individuals are sitting on Sh1.41 trillion cash pile in a soft economy.

This comes at a time when every sector in the current economy is struggling rather facing a cash crunch. CBK says investment options are becoming limited and the rich have opted for soft-economy which has reflected a growth of 27 percent since 2017.

CBK’s data indicates that the rich are saving in Foreign currency. The fixed deposits of foreign currency rose from Sh553.2 billion to Sh625.3 billion in two years. Clearly, the rich have created their parallel economy and obviously protecting their value by hedging against the local currency.

The revelation comes in the backdrop of CBK’s data showing that cash in circulation outside banks stood at Sh227 billion in October, down from Sh269 billion in the same month last year.

Economists and financial Analysts stated that high-net-worth investors and companies with billions of shillings in fixed accounts have opted not to invest in expanding their businesses or starting new ventures, citing lower sales and returns.

The cash in banks fixed deposits accounts is now equivalent to what the Kenya Revenue Authority (KRA) collects annually from taxes.

“The future output sub-index still indicates that firms are cautious on activity over the coming year,” said Jibran Qureishi, regional economist for East Africa at Stanbic — which tracks business through its monthly Kenya Purchasing Managers’ Index (PMI).

Since 2017, when Kenya went through a bruising General Election and a repeat presidential election, many companies have fallen into a financial crisis which has caused reduced investments, hiring plans and a continuation of job cuts. Our President, funny enough—an economist— is still wondering why Kenyans not only lack jobs but also broke to the tooth.