British security printer De La Rue has won a Sh11.1 billion (£85 million) three-year contract to design and manufacture Kenya’s new generation currency, the latest reports indicate.
De La Rue says in its latest disclosure at the London Stock Exchange that it plans to deliver the first batch of the banknotes, which will not bear the image of an individual, in the course of next year.
“Since the period end (post-September), we have secured a significant contract with the Central Bank of Kenya [CBK] to print its new series of banknotes, to the value of circa £85m (£19m of which we expect to deliver in the next 12 months),” De La Rue said in a trading update.
The pricing of the initial batch of the new notes means it will cost the taxpayer Sh2.4 billon.
The award of the contract comes after the Court of Appeal on October 12 reversed the High Court’s earlier decision to quash De La Rue’s winning of the tender. The decision allowed the CBK and the security printer to proceed with production of the new currency notes as required under the 2010 Constitution.
Activist Okiya Omtatah has meanwhile filed a notice to fight the Court of Appeal’s finding at the Supreme Court, arguing that the procurement process favoured De La Rue and that the firm’s bid did not meet the requirements of the law.
If admitted at the Supreme Court, Mr Omtata’s appeal could further delay the printing of the new generation currency whose procurement started in 2014.
De La Rue, which has operated in Kenya for more than 25 years, says it is investing more in its factory in Ruaraka, Nairobi as part of a long-term plan to become a regional and Pan-African security printer.
Besides banknotes, the company prints cheque books and passports, among other important documents.
The latest deal with the CBK will enable the government to comply with the Constitution, which says that “notes and coins issued by the Central Bank of Kenya may bear images that depict or symbolise an aspect of Kenya but shall not bear the portrait of an individual.”
Kenyan currency currently bears the images of former presidents Jomo Kenyatta, Daniel arap Moi and Mwai Kibaki.
De La Rue’s contract comes after the government took a 40 per cent stake in the multinational’s local subsidiary (De La Rue Kenya EPZ Limited), paying £5 million (Sh654 million) in the transaction.
The stake gives the government, the largest customer of the multinational, an opportunity to recoup part of its currency printing expenses through profit sharing.
De La Rue is also betting on the joint venture to smoothen its relations with the government which has been rocky for years.
Under the agreement, the printer continues to operate and manage the joint venture.
Besides local customers, including the government, the De La Rue factory also prints currency and documents for export to overseas clients.
Kenya is likely to continue relying heavily on hard cash for payments. Cash accounts for 98 per cent of total transactions, according to a report by McKinsey and Mastercard Advisers.
It is, however, expected that increased uptake of digital payments enabled by cards, Internet and mobile telecommunications will reduce cash dominance in the long term.
Singapore, the Netherlands and France have been the most successful countries at weaning themselves off cash. Only 39, 40 and 41 per cent of transactions in these countries are settled in hard currency respectively.
The stock of outstanding notes and coins in Kenya stands at about Sh1.4 trillion, according to CBK statistics.
The new currency will circulate concurrently with the current notes and coins.
The CBK had invited the public to submit their proposals for features to be included in the upcoming banknotes.
The new currency is expected to capture the progressivity of the Constitution and the country’s growth aspirations as captured in the Vision 2030.
The design elements are envisaged to be “unique to Kenya, attractive, socially acceptable and culturally relevant while creating harmony among Kenyans.”
The new currency contract adds to the list of lucrative tenders De La Rue has won in the local market. The multinational, for instance, was also picked to deliver the government’s ePassport system.