Loose Change?–$2.1B in “Mystery Cash” flowed into Kenya last year

“Mystery of Sh164bn smuggled into Kenya”, from the Daily Nation

Having risen to $2.1 billion, the current level represents a massive 100 per cent increase within a year. The mysterious billions are over and above the combined last year’s export earnings from coffee, tea and horticulture. As a matter of fact, the line ‘errors and omissions’ has grown into the single largest item in the economy’s balance of payments statistics.

The riddle of the mysterious billions has quickly become a major talking point within both Nairobi’s financial community and donor circles. Central Bank of Kenya governor Njuguna Ndung’u conceded that the strange inflows had become a big worry. He said the cash was “artificially driving the country’s balance of payments surplus”.

“We do not know where this money is from,” he added, promising that the Central Bank was designing new systems to trace the sources of such funds. The International Monetary Fund (IMF), which keeps close tabs on international capital flows, has already initiated discussions on the issue with the government, Central Bank of Kenya and some of the large commercial banks and foreign currency dealers.

According to IMF senior resident representative W. Scott Rogers, part of the billions flowing into the economy may be coming from Somali pirates, but he stressed that the situation was not wholly attributable to such activity. He told the Daily Nation that difficulties in capturing foreign exchange inflows by expatriates, the donor community and international NGOs had clearly aggravated the situation.

All the better to run campaigns!