Kenya keeps tight control over its foreign exchange resources, but abandoned its exchange controls in 1993. The Kenyan shilling (KES or KSh) is maintained on a free-floating exchange rate, and money transfer to Kenya or sending money out of Kenya is not restricted. The Kenyan government has also ensured that international business payments are easy to make to support foreign investment.
The shilling floats freely and is fully convertible to foreign currencies, the government imposing very few restrictions on capital flows. The central bank reserves the right to intervene in the monetary market to avoid price volatility, but it refrains from intervening except in the case of disruptive changes in the market.
All foreign exchange dealers, including commercial banks and forex bureaus, are licensed and regulated by the central bank. As of September 2014, the central bank counted 94 licensed forex bureaus, most of which are located in the capital, Nairobi. Bureaux deal primarily in smaller cash exchanges, while larger transactions are handled by the commercial banking network. Under its Foreign Investment Promotion Act (FIPA), the government ensures that foreign investors are free to repatriate capital and transfer other investment income abroad, including profits, dividends and interest. Kenya’s anti-money laundering and terrorism financing legislation requires transfers over a value of KSh500,000 to be declared to customs authorities. There are no restrictions on the amount of cash that may be brought into the country, but travellers may carry a maximum of KSh100,000 out of the country at one time.
The Central Bank of Kenya (CBK) conducts national monetary policy so as to ensure the health of the financial system, preserve a healthy level of foreign exchange reserves, and maintain price stability.
Kenya is a founding member of the East African Community (EAC), a regional association established in 2000 that also includes Tanzania, Uganda, Rwanda and Burundi. EAC members benefit from a customs union, common market and double taxation treaties today; in November 2013, member countries signed a protocol to develop a regional monetary union, which is expected to lead to the adoption of a common currency in the next 10 years. In the buildup to a full union, regional governments are strengthening the coordination of their fiscal and monetary policies. Progress has been slow, however, and the propsect of a common currency remains distant.
Kenya’s economy, the largest in East Africa, relies on foreign exchange receipts from tourism and from agricultural and horticultural exports, primarily tea, coffee and cut flowers. The country also benefits from the largest and strongest banking sector in East Africa. Significant hydrocarbon resources have been discovered in recent years. Their develop will likely have a transformative impact on the economy, but this remains several years away.
Kenya’s monetary unit, the shilling (KES), is abbreviated to KSh. One shilling is equivalent to 100 cents. The Central Bank of Kenya issues banknotes in values of KSh50, KSh100, KSh200, KSh500 and KSh1,000, and coins in values of 50 cents and KSh1, KSh5, KSh10, KSh20 and KSh40.
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