Kenya has signed a Sh14.2billion ($109,422,740) five-year deal with Germany’s Giesecke+Devrient Currency Technologies GmbH (G+D) to print new notes to replace old ones and also avoid possible stock-outs, the Central Bank of Kenya (CBK) has revealed.
CBK Governor Kamau Thugge told the National Assembly’s Finance and National Planning Committee that G+D replaces Britain’s De La Rue.
He said the German firm was picked through a classified procurement amid risks of a stock- out of bank notes which would have had grave economic and security implications for the country.
“The Classified Procurement process was therefore necessary to avert a stock-out crisis. The procurement was conducted in accordance with the Public Procurement and Disposal Act, and with the approval of the National Security Council and the Cabinet,” Dr Thugge told MPs.
“The cost of the banknotes was $109,422,740 using the exchange rate at the date of the contract signing. The contract for 2019 series banknotes was worth $112,856,000”
The notes will bear the signature of Dr Thugge and Treasury Principal Secretary Chris Kiptoo. They will have the year of print as 2024 and will bear new security threads with colour-changing effects that are specific to each denomination. CBK said the rest of the features remain the same as those of the series issued in 2019.
De La Rue –in which the government owns a 40 percent stake— shut down its operations in Kenya in the financial year that ended March 2023 for lack of new orders and spent Sh2.48 billion to lay off 300 workers, pay lawyers, and write off its assets.
Dr Thugge said the CBK embarked on sourcing a new currency printer after De La Rue made a business decision to close down its printing firm in Nairobi’s Ruaraka area.
“The plant was owned by DLR, with the government of Kenya through the National Treasury, acquiring a 40 percent stake in De La Rue Kenya EPZ Limited, a Joint Venture with DLR in 2017. This company printed the 2019 series of Kenyan banknotes until January 2023,” he said.
“Around mid-2023, CBK determined that the country was at risk of a stock out of currency banknotes. A stockout has significant economic and national security risks. A stock out of the Sh1,000 notes was looming,” the Governor said.
Dr Thugge told the committee chaired by Molo MP Kuria Kimani that the contract with the German currency printer was reviewed and approved by Cabinet through the National Treasury and the Attorney General as required by law before execution by the parties.
“Due to its national security implications, CBK’s request was initially considered by the National Security Council before its tabling before the full Cabinet. The Cab Memo was signed by the CS Treasury and the Attorney General,” he said.
“The National Security Council and the Cabinet approved the classified procurement as requested” the CBK boss added.
CBK revealed that under the five-year contract, Kenya will receive 2.04 billion banknotes to replace those that are torn, worn out, or destroyed.
Paul Wanyeki, the Director for Currency at the CBK revealed that the country would over the five-year contract receive 460 million, 50-shilling banknotes and 690 million, Sh100-shilling banknotes.
He said Kenya will also receive 260 million, 200-shilling notes, 170 million, 500-shilling notes, and 460 million banknotes of Sh1,000 denominations. The CBK said Sh1,000 new banknotes with enhanced security features are already in circulation.
Mr Wanyeki said the average cost of printing 1,000 pieces of banknotes is $53.5 (Sh6,842) compared to $48 (Sh6,198) that was spent to print the 2019 series by De La Rue.
“We have looked at the cost per 1,000 pieces of banknotes in the old and the new contract. There is an increase of cost of about 11 percent,” Dr Thugge said.
“Over time, currency notes get old, get torn, and are withdrawn from circulation. This means the money supply in the economy reduces over time. It is therefore critical for the money to be periodically replenished” the CBK boss added.
Dr Thugge told the committee that currently, there are about Sh330 billion banknotes in circulation in the country.
