Kenyans lost Sh7.3 billion after the four-month phase-out of old Sh1,000 notes.
The Central Bank of Kenya (CBK) says that is now lost value in its fight to deal with illicit cash.
In total, Sh209.6 billion was returned by the end of September 30 deadline.
During the demonetisation, a total of 3,172 suspicious transactions were flagged and are now under investigations by crime busters.
CBK on Wednesday said it mainly targeted to deal with illicit financial flows and counterfeit notes in the exercise, a goal it said it achieved.
It also conducted 15 targeted inspections on banks that it suspected of not strictly following its stringent anti-money laundering procedures.
Besides restoring discipline in the financial sector, the success or failure of replacing the old Sh1000 note is what will define the legacy of the ninth CBK Governor Patrick Njoroge.
And he knows it.
“Time is up! September 30, 2019, has come and gone. Bye bye and goodnight! That’s it,” Dr Njoroge said in a tweet at midnight on Monday night, as he marked the deadline.
Though the CBK has kept the country guessing on the parameters it will use to measure the success of the demonetisation, it has spared no effort to get the message out on the significance of the exercise known.
Except some marginal pressures on the Kenyan shilling that has seen it lose ground from Sh101 trading against the US dollar to about Sh103 over the demonetisation period, the rest of the economy has remained largely undisturbed by the exercise.
Kenya has also not suffered a rise in inflation that hit other nations that went the demonetisation route.
In fact inflation figures over the period show that the cost of living has remained within the CBK target and dropped to an 18-month low of 3.8 percent in September.
Analysts, however, say the success and effects of such an exercise on the economy is felt later on after the process is completed.
“Work usually starts after the exercise is completed and that is when you can tell its effect and impact on the economy,” Tony Watima, an economist who has been following the demonetisation said.
Most nations that have walked down that path did so to rid their country of dirty money, return billions of shillings back into circulation as well as deal with the twin challenges of money laundering and terrorism financing.
Some ended up with unintended consequences after the exercise that set them up against bigger problems.
India, which is one of the nations that did a similar exercise most recently, saw 99 percent of ‘black money’ targeted in the crackdown make its way back into the banking system.
The United Nations said the measure did not, by itself, impede future black money flows in new denominations— meaning that the country had travelled full circle in a process that saw it spend billions of shillings for nothing.
Ghana attempted this in 1982 when it ditched its 50 cedis note in an attempt to deal with rampant tax evasion and empty excess liquidity.
It had the downside of fuelling a currency black market, resulting in a total failure.
Two years later, a debt ridden Nigeria, under the Muhammadu Buhari government, introduced a new currency in 1984 and banned the old notes.
This threw the economy of Africa’s most populous nation into chaos. It led to a spike in inflation, crashing the country’s economy.
The other nations where demonetisation failed include Myanmar (1987), Soviet Union (1991) and North Korea (2010).
North Korea was one of the most spectacular failures.
When Kim-Jong II knocked off two zeros from the face value of the old currency in order to kick out the black market, he had not fully thought out what impact it would have on his population.
The policy ended up leaving its citizens with no food and shelter, basic needs that any government should guarantee.
Demonetisation have not always resulted in spectacular failures.
There have been five bright spots where the exercise worked for the economy and resulted in the intended outcomes, despite various challenges.
These include, Pakistan (2016), the United Kingdom (2002), Australia (1996), and the European Union (2002). Zimbabwe attempted it in 2015 and it is the only African country that partially succeeded given the fact that it went for the US dollar, a stable currency that is regulated far from home.