What Is the Kenyan Shilling (KES)?

The Kenyan shilling (KES) serves as the official currency of the Republic of Kenya, utilized not only within Kenya but also in neighboring countries like Sudan and Somalia. While Sudan and Somalia have their currencies, the Somali Shilling and Sudanese Pound, respectively, the Kenyan shilling maintains its distinction. Comprising 100 cents, prices often feature the abbreviation KSh, denoting shillings. KES is identified by the foreign exchange (FX) trading symbol.

**Key Takeaways**

• The Kenyan shilling (KES) functions as the national currency of Kenya, Sudan, and Somalia in Africa.
• KES stands out as one of the most stable currencies in East Africa.
• KES is favored in nearby nations as a stable asset storage option compared to local currencies.

Understanding the Kenyan Shilling (KES)

In 2009, the KES/USD exchange rate stood at about 75 shillings per U.S. dollar, declining over the subsequent years to approximately 104 shillings per dollar in 2015 and 2017. Since 2016, the Kenyan shilling’s value has hovered around 100 units against the dollar, with concerns arising over Kenya’s accumulating public debt. As of December 28, 2023, USD $1 equates to roughly 157 KES.

The Kenyan shilling retains its status as one of East Africa’s most stable currencies, commonly used even in bordering nations like Sudan and Somalia. Though less volatile compared to other regional currencies, the exchange rate for the Kenyan shilling has generally weakened relative to the U.S. dollar over the past decade.

Introduced in 1966 to replace the East African shilling, the Kenyan shilling traces its origins to the era following Kenya’s independence from British rule, where it replaced the previous currency used in British-controlled East Africa. Notably, in compliance with recent constitutional changes prohibiting individual portraits on currency, Kenya initiated the issuance of new banknotes and coins in 2018.

The Central Bank of Kenya oversees the nation’s currency, allowing its exchange rate to fluctuate freely against global currencies in the forex market. Functioning under a mandate to uphold price stability, ensure financial system liquidity, and support growth and employment, the central bank plays a pivotal role in the currency’s stability.

KES and Kenya’s Economy

The value of a currency like the Kenyan shilling vis-a-vis other currencies significantly hinges on the preference of individuals and institutions to hold assets denominated in shillings. This inclination is partly determined by how Kenya’s trading partners perceive the country’s economic prospects and stability.

Notably, as per the World Bank, Kenya’s economy, after years of stagnation, displayed a surge in its gross domestic product (GDP) annual growth rate, reaching 5.8% in 2016, marking one of the Sub-Saharan Africa’s fastest-growing economies, albeit slightly reduced to 5.4% in 2019. The growth is attributed to increased tourism and infrastructure investments in Kenya.

According to World Bank statistics, Kenya’s gross national income per capita, measured in U.S. dollars, doubled between 2006 and 2016, with the GDP climbing from $25.8 billion to $70.5 billion during the same period. However, the nation’s public debt as a percentage of national output surged to 60% from approximately 40% in 2013.

M-Pesa

M-Pesa represents a mobile banking service enabling users to store and transfer funds through their mobile devices. Launched in 2007 by Safaricom, Kenya’s largest mobile network operator, M-Pesa aimed to offer financial services accessibility to the country’s populace. The term “M” denotes mobile and “Pesa” translates to money or payment in Swahili.

Deposits collected through M-Pesa are channeled into bank accounts under Safaricom’s control, serving as regular checking accounts insured up to 100,000 KES (approximately $1,000) by the Deposit Protection Fund.