|Editorial: Root out the evils of bouncing cheques|
|Written by Administrator|
| January 07, 2008: It is now over five years since the first move was taken to outlaw the practice of issuing bad cheques in Kenya.|
After the law was first introduced in the 2003 Budget, it lingered into political limbo for some years and was finally passed in the last years of President Kibaki’s first term.
It was expected that now with teeth to bite, both the Attorney General and the Central Bank of Kenya would finally move fast to ensure that the population knows the consequences of cutting a bad cheque to pay for transactions and to actively prosecute offenders.
However, revelations by the Kenya Bankers Association that Kenyans issued 148,211 bouncing cheques representing Sh2.2 billion of transaction value in the period between January and December , 2007 is really bad news.
It underscores how far we need to go to modernise both our national payment system and reform the ethics of our commercial culture. Such a high number of dud cheques is simply unacceptable and it shows that the CBK and the AG are not doing enough to stop the practice.
We suppose that a pretty decent and reasonable argument can be made by the Attorney General’s office that in terms of priorities when you look at the wider crime spectrum in Kenya, chasing and locking into jail thousands of individuals issuing bad cheques ranks rather low on their agenda.
It is well know that the commercial justice system is already under-funded, lacks capacity in terms of experts and the systems is choking from the existing caseloads.
The CBK can also argue that a dishonoured cheque incidence level of Sh2 billion (in nine months) in a national payment system that clears Sh8.5 billion worth of cheques daily—and nearly Sh3 trillion annually—is hardly alarming. This is just a blip in the statistical radar.
However, the big issue here is enforcing the rule of law, which is a grand principle in the development agenda of this country.
The day the ordinary man trusts that he or she can participate in a commercial transaction by merely writing a promise to meet or receive their end of the bargain will be a major milestone in the commercial evolution of this country.
A cheque and credit card system that works perfectly will bring major efficiency gains in our trading system and boost the ability of the nation to grow wealth faster. It will also help cut transaction costs for both consumers and the CBK because of the reduced need to handle cash.
Of course, all this is well known to the CBK and our issue here is that the banking regulator is now doing enough to sensitise the public about the issue of bouncing cheques.
The CBK ought to initiate a professional business and social marketing advertising campaign that will educate the public about the importance of upholding the integrity of our cheque payment system.
The social marketing campaign should aim at both informing the public of the legal consequences of writing bad cheques and instilling a strong sense of shame for offenders.
The sense of shame can be reinforced through well-publicised prosecutions by the AG of the worst offenders.
Unlike other government agencies that can plead that they do not have the money, this would not be a problem to CBK.
In the last five years, a well thought-out social marketing campaign has helped the Kenya Revenue Authority to both boost the number of taxpayers and collections.
A similar programme by the Electoral Commission of Kenya helped sensitise and mobilise the youth vote in the just concluded General Election.