Central Bank of Kenya Governor Kamau Thugge.
Kenya has signed a Sh14.2 billion ($109,422,740) five-year deal with Germany’s Giesecke+Devrient Currency Technologies (G+D) to print new notes to replace old ones and also avoid possible stock-outs, Central Bank has revealed.
CBK Governor Kamau Thugge told the National Assembly’s Finance and National Planning Committee Wednesday that G+D is the firm replacing Britain’s De La Rue, ending speculation over the identity of the company that got the plum deal.
He said the German firm was picked through a classified procurement process 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 today.
“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,” he added.
The notes will bear the signatures 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's exit
De La Rue printing centre in Ruaraka, Nairobi.
British printer De La Rue – in which the government owns a 40 percent stake — shut down its Kenya operations in the financial year that ended March 2023 due to lack of new orders. The firm spent £15.1 million (Sh2.48 billion) to lay off over 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's exit.
“The (Ruaraka) plant was owned by De La Rue, with the government of Kenya, through the National Treasury, acquiring a 40 percent stake in De La Rue Kenya EPZ Limited, 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 bank notes..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.
“Due to its national security implications, CBK’s request was initially considered by the National Security Council before its tabling before the full Cabinet,” 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.
Bank note printing
Paul Wanyeki, Director for Currency at CBK, revealed that the country would over the next five years 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 denomination. 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.
