interest rates — why this time will be different dr. patrick njoroge the battle for affordable credit went into high gear with the introduction of interest rate caps on september 14, 2016. this followed long - standing concerns about the high interest rates charged by commercial banks, their poor customer service and perceived insensitivity. three years later, the caps have been repealed and the verdict is clear — there are winners and losers. those that had borrowed at high rates ( above cbr + 4 percent ) had a bonanza. however, for the majority of potential borrowers and the most vulnerable, bank credit was unavailable. micro small and medium - size enterprises ( msmes ) were shut out and had to contend with shylocks at highly unfavorable terms. certainly this did not engender shared prosperity among kenyans. but the lingering question is whether banks will now roll back to their old ways, or will they strive to build a banking sector that works for and with all kenyans. will they react with courage and hope for the future, or roll back to mistrust and caution? the central bank of kenya ( cbk ) has set the pace by defining a clear vision of a banking sector that is responsible, disciplined and aligned to customers ’ needs. four pillars underpin this vision : risk - based credit pricing, transparency, customer centricity, and entrenching an ethical culture in banks. pricing — loans should be priced responsibly based on the customer ’ s risk profile and all positive and negative information from credit reference bureaus ( crbs ). the credit information sharing ( cis ) mechanism has recently been improved and work is ongoing to enhance it further, e. g., increasing the sources of information, enhancing the frequency and integrity of the data reported to crbs, and training of bank staff. transparency — banks need to fully and widely disclose the pricing ( all charges and fees ) of their products. to this end, the cost of credit website and a mobile app that enable customers to “ window shop ” for personal loans and mortgages were launched in 2017. further improvements are needed to incorporate more products and improve the overall customer experience. customer centricity — banks need to be aligned to the needs of their customers, including tailoring products that best serve customers ’ needs and resolving swiftly customers ’ complaints. for instance, banks recently showcased products that were tailored to the unique conditions of msmes. ethical culture — customers have perceived the high

are the drivers of a newly reborn and prosperous kenya. additionally, for the first time, the new banknotes bear features that make them more accessible to the visually impaired members of our society. in the coming days, cbk will roll out an awareness campaign to educate the public on the features of the new banknotes. your excellency, the new banknotes will circulate alongside those previously issued but not withdrawn. however, we have assessed the grave concern that our large banknotes — particularly the older one thousand shillings series — are being used for illicit financial flows in kenya and also other countries in the region. more recently we have seen the emergence of some counterfeits. these are grave concerns that would jeopardize proper transactions and the conduct of commerce in our currency. to deal conclusively with these concerns, all the older one thousand shillings series shall be withdrawn. by a gazette notice dated may 31, 2019, all persons have until october 1, 2019, to exchange those notes, after which the older one thousand shillings banknotes will cease to be legal tender. more details about this will be provided. finally, let me thank all kenyans for their patience with us, their contributions in the design of these new banknotes, and their support of the central bank as we seek to discharge our mandate. the launch of the new generation banknotes at the madaraka day celebrations underscores that the history of the central bank is intertwined with the history of our country. your excellency, it is my distinct honour and privilege, and it gives me great pleasure, to request you to unveil the new generation banknotes of the republic of kenya.