The Sh1,000 note is entrenching itself at the heart of Kenya’s cash economy as notes in circulation surged to Sh388.4 billion after the new currency printing tender.
Latest data from the Central Bank of Kenya (CBK) shows the notes in circulation have grown from Sh278.64 billion in August 2024, coinciding with the award of a currency printing tender to a German firm, Giesecke+Devrient Currency Technologies GmbH.
The rise in the notes also emerged as cash circulating in consumers’ pockets or outside banks rose 10.4 percent to Sh323.2 billion in December from Sh292.8 billion in a similar period in 2024 on the back of increased economic activity.
The Sh1, 000 note accounted for about 86.3 percent of the total value of banknotes in circulation in December, squeezing the share of smaller denominations, including Sh50, Sh100, Sh200 and Sh500—all of which saw their shares drop compared to December 2024.
The 86.3 percent for Sh1,000 notes is the highest in over 10 years, climbing from 85.6 percent in the previous year, according to Central Bank of Kenya (CBK) data.
The Sh388.41 billion bank notes in circulation at the end of the year were an increase from Sh360.46 billion in a similar period last year.
The value of notes was in addition to Sh11.52 billion coins, bringing the currency in circulation to Sh399.93 billion at the end of the year.
Currency in circulation refers to all physical paper notes and coins issued by CBK that are available for use in an economy. This differs from cash outside banks, which is the active cash that is actually floating around in the hands of people, businesses, and shops.
“When growth in currency in circulation is being driven by Sh1,000 notes, it indicates that the value of these notes in circulation has increased faster than that of other denominations,” said Dominic Murage, acting CEO at Consolidated Bank of Kenya.
Dr Murage, a finance scholar and a lecturer at the University of Nairobi, explained that an increase in cash in circulation driven by Sh1,000 notes could point to the issuance of more high-value notes by the CBK.
“It could mean more Sh1,000 notes have been issued into circulation or the public is holding a larger share of cash in Sh1,000 notes rather than in Sh500, Sh200, Sh100, etc,” said Dr Murage.
The trend signals a sustained preference for large-denomination notes among businesses and households, amid rising transaction values in an inflationary environment and the need for convenience in handling bulk payments.
The Sh388.41 billion banknotes in circulation at the end of the year were an increase from Sh360.46 billion in a similar period last year.
The value of notes was in addition to Sh11.52 billion coins, bringing the currency in circulation to Sh399.93 billion at the end of the year.
Lower denomination notes continued to account for a small slice of the cash mix. Notes such as Sh50, Sh100 and Sh200 collectively make up less than 10 percent of the total value, highlighting their limited role in large-value transactions.
In absolute terms, the value of Sh1,000 notes in circulation grew by Sh26.66 billion between December last year and a similar period in 2024, compared with Sh51 million for Sh500 notes and Sh568 million for Sh200 notes. The value of notes of Sh100 and Sh50 in circulation increased by Sh427 million and Sh209 million, respectively.
The Sh500 note, once accounting for over 10 percent share in the value of notes in circulation, has also seen its relative importance wane, with its share dropping to 4.1 percent at the end of December, coming third after the Sh100 note at 4.43 percent.
Kenya’s economy has experienced price increases over time, pushing up the value of everyday transactions and reducing the practicality of smaller notes. Besides inflation, the informal sector, which is still heavily reliant on cash, tends to favour high-denomination notes for convenience, particularly in wholesale trade, transport and real estate-related payments. The high-value notes minimise the physical volume of cash handled in transactions.
The value of Sh1,000 notes in circulation closed last year was 21 times higher than that of the Sh500 notes, compared with 2010 when the gap was 7.1 times. This defies the popular view that lower-denomination notes are in high demand for meeting daily transactions.
There has been a rapid growth in mobile money transactions in the country, with deals of up to Sh100 being free in most of the platforms. This has encouraged low-value deals to be settled through digital platforms such as M-Pesa.
The value of cash handled by mobile money agents, including those linked to banks and telecommunications firms, closed last year at Sh8.236 trillion compared with Sh8.697 trillion in the previous year.
Last year’s value of mobile money deals was nearly three times the Sh2.816 trillion a decade earlier.
Cash remains an important medium of exchange in many parts of the economy, especially in rural areas and informal urban settlements where digital penetration is uneven.
However, in many economies, continued expansion of high-value notes usually poses policy considerations for the central bank, particularly around currency management, anti-money laundering oversight and the cost of printing and distributing cash.
Multiple countries, including India, Singapore, Nigeria, and Ghana, have at one point withdrawn high-value banknotes in efforts to flush out illicit wealth, curb corruption and tackle money laundering and currency counterfeiting.
India withdrew its highest value banknotes—500, 1,000 and 2,000-rupee notes— as part of a clampdown on ‘black money’. In 2014, Singapore stopped printing the mammoth $10,000 banknote (equivalent to about Sh1.29 million), one of the world’s largest value banknotes.
Kenya undertook a major currency overhaul in 2019, including the withdrawal of the old Sh1,000 note, in part to curb illicit financial flows and enhance transparency in the financial system.
The CBK’s demonetisation exercise, conducted between June 1 and September 30, 2019, saw 209.66 million of the 217.05 million Sh1,000 notes in circulation returned, rendering 7.39 million pieces worth Sh7.39 billion worthless.
During the demonetisation period, the share of Sh1,000 notes in circulation fell below 80 percent, averaging between 76.36 percent and 79.56 percent, before rebounding above the threshold in December of the same year.
Since then, the new series of the high-value banknotes has gradually entrenched itself, with the Sh1,000 denomination emerging as the backbone of cash circulation.
Incidents of corruption linked to high-value notes have been reported before in the country. For instance, the Sh500 note was once on the spot in Kenya’s 1992 election. The crispy note, which was introduced in 1994, was allegedly circulated by politicians to sway votes their way.
