Kenya's Foreign Currency Deposits Cross Sh500 Billion Mark for the First Time

Kenya's foreign currency deposits in local banks has hit an all-time record of more than 500 billion shillings.

The rise in the foreign currency deposits is largely attributed to Kenyans taking advantage of the tax amnesty program to send money stashed in oversea accounts back home.

Data from Kenya National Bureau of Statistics (KNBS) and the Central Bank of Kenya (CBK) indicate the foreign currency holdings in local banks stood at Sh514 billion at the end of May, representing a 17 per cent or Sh73 billion rise in 12 months.

“From our discussions with the banking sector players, we attribute the increase in foreign exchange deposits to the tax amnesty programme, with a number of tier three banks recording notable inflows,” said Genghis Capital macroeconomic analyst Churchill Ogutu.

“With the tax amnesty extended till June next year, we expect the foreign exchange deposits to continue the positive momentum.”

The tax pardon was announced by Treasury Cabinet Secretary Henry Rotich in 2016 to encourage wealthy Kenyans holding undeclared assets abroad to bring them home by June this year.

The deadline period for the amnesty was however extended to June 2019 to allow more fat cats return the cash to Kenya. After the end of the pardon, those holding undeclared assets overseas will face a 20 per cent penalty on the tax payable on the assets.