They were once the kings in settling transactions. Nearly every item required some 50 cent or Sh1 coin. But now they lie in jars and drawers— ignored and forgotten.
Some traders would rather round off prices to at least Sh5 than withstand the nightmare of sorting and counting 50 cent or Sh1 coins. Some buyers are silently endorsing the idea.
But Willy Kimani, the chief commercial officer at Naivas Supermarket, says with cash still the king of transactions despite a surge in other payments such as M-Pesa, coins are the surest bet for offering correct value to consumers.
“Pricing can never be 100 per cent simplified to 100 units. For us, it is proper when we are giving exact value. That means having prices such as Sh178 instead of Sh180,” he says.
“But getting coins has become a challenge. We always get them from places such as petrol stations because most people say they run into challenges when they try to bank coins. Banks don’t love coins but we do love them.”
In fact, some banks levy fees on customers who deposit coins, calling it a cash handling fee.
Family Bank’s tariff, for example, shows it charges a coin deposit handling fee of Sh100 for every Sh1,000 coins. The fee jumps to two per cent of the value of coins above Sh5,000.
Equity Bank’s tariff from September 2016 shows the lender was charging customers 0.25 per cent to transact bulk coins of over Sh10,000. For notes, the fee was starting on transactions above Sh500,000.
HF Group customers are charged 2.75 per cent of the coins’ value to bank them, meaning coins worth Sh1,000 will cost Sh27.50.
Children have noted that coins such as 50 cents and Sh1 are not buying as much as they used to, and so the coins are no longer music to their ears.
The motivation to bend and pick such coins when dropped on the road is fading.
But Central Bank of Kenya (CBK) is in no rush to retire these coins from the legal tender. In fact, official data shows the regulator has been adding the coins into the economy despite the growing preference for cashless transactions such as M-Pesa.
Between June 2018 and June 2021, CBK added Sh1 coins worth Sh80 million. The economy now has Sh1 coins worth Sh882 million and 137 million 50-cent coins worth Sh68.5 million.
These scattered treasures—totaling Sh950.5 million— are everywhere in circulation, but rarely in the right places to be used for the intended purposes.
CBK data shows customers deposited coins worth Sh151 million in the year to June 2021, down 35 per cent from Sh232 million in the preceding similar period. Coin withdrawals also fell from Sh47 million to Sh41 million.
For shops selling scratch card airtimes, 50 cents and Sh1 coins are finding a new lease of life. They lie on shelves for customers to use in scratching the cards to reveal the unique code for recharging talk time on their phones.
In football matches, coins continue to be that important tool that settles key decisions—like flipping to decide which team takes the first penalty.
Information on the CBK website shows the first Kenyan coins— in the denominations of five cents, 10 cents, 25 cents, 50 cents and Sh1—were issued on April 10, 1967.
The five cents, 10 cents and 25 cents were retired in December 2011 but 50 cents and Sh1 keep going despite inflation over the years having cut their relevance.
To some, these coins only echo the nostalgic days when their value meant a lot in settling transactions for goods and services.
But while many find coins a burden, for others such as charities, it is a lifeline that supports many good causes.
Many of the organisations rely on people to impulsively give up their spare change in places such as supermarkets for good causes such as raising money for children homes or buying sanitary pads for school girls.
Many donations, usually in coins, are dropped into charity tins at supermarket checkouts, with shoppers not easily giving out notes as they would coins.
Cutting circulation of coins could also hurt prospects of vulnerable groups such as beggars to ask for and receive monetary assistance from the public.
Some governments, though, are slowly retire low denomination coins by halting production.
In the UK, Royal Mint—a government-owned firm that produces coins—in 2020 announced that it would not be producing any new £2 or two pence coins for at least a decade, as its stocks remain high because of reduced use of cash.
Bahamas stopped production of its one-cent piece in January 2020. Australia stopped producing one and two-cent coins in 1992 while Canada stopped making one-cent coins in 2012.
When President Uhuru Kenyatta unveiled new generation coins in 2018 in compliance with the Constitution that proscribes portraits of people on currency, the 50 cent coin was conspicuously missing.
It was official; the coin would not be minted again.
Nonetheless, coins have been battered by inflation-the reduction of money’s purchasing power.
If you are also a smoker, you will probably remember that 39 years ago, the 50 cent coin would get you a stick of Embassy Light cigarette. Today, the same stick goes for Sh10, or the price of a whole packet 39 years ago.
Inflation seems to have set its eyes on the Sh1 coin. But if the shilling too has been badly battered by the increase in prices of goods and services, it has not shown signs of capitulation.
One-bob haters are going to wait longer for its exit.
“The shilling itself looks very bulky, but you still need it for transactions,” says Samuel Nyandemo, an economics lecturer at the University of Nairobi.
To many Kenyans, the Sh1 coin may be bulky and lack some purchasing power, but it has immense saving power.
In a highly price-sensitive market as Kenya’s, firms try to outdo each other on price. A price margin of Sh1 might be what separates a firm from extinction.
This cut-throat competition through granular pricing of products is not just good for consumers but for CBK, too. Thus, the continued existence of the Sh1 coin means that shoppers will more likely than not get a 500ml litre of milk at a price of Sh44 and not Sh45.
And as long as firms can only increase prices of products by a shilling or two, CBK is happy as it achieves its core function of controlling inflation.
University of Nairobi lecturer XN Iraki said in a past interview that the reason the Sh1 coin will not leave the scene soon is that it is “the key currency unit”.
