CBK governor fails to table Sh14.2 billion money-printing deal with German firm
Central Bank of Kenya Governor Kamau Thugge.
Central Bank of Kenya Governor Kamau Thugge has failed to table contract documents and due diligence reports on the procurement of a German firm to print Kenya's new bank notes at a cost of Sh14.2 billion.
Dr Thugge on Thursday snubbed a meeting called by the National Assembly's Finance and National Planning Committee to receive the documents that Dr Thugge promised to make public last month.
The CBK 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 CBK picked the German firm to print new notes, months after allowing the local subsidiary of British printer De La Rue – in which it owns a 40 percent stake-to shut down for lack of new business.
The committee, chaired by Molo MP Kuria Kimani, has launched an investigation after the CBK revealed that a German firm had been hired to print new notes.
The committee expected to receive the signed contract documents and due diligence reports that the CBK signed with the German currency printer which was picked through classified procurement.
Future date
The CBK boss wrote to the Clerk of the National Assembly on September 23, 2024 seeking postponement of the meeting on grounds that he will be engaged in the bi-monthly meeting of the Monetary Policy Committee (MPC) technical meetings.
''Regrettably, this week I will be engaged in the bi-monthly meetings of the Monetary Policy (MPC) Technical Meetings, and hence will not be able to attend the scheduled meeting,'' Dr Thugge wrote in a letter dated September 23, 2024.
''I am therefore humbly requesting for adjournment of the meeting to another future date suitable to the committee.''
Dr Thugge had earlier told the committee that 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 new German printer took over the multi-billion shilling currency printing contract after De La Rue Kenya EPZ Limited, a banknote printer in which Kenya bought a 40 percent stake for £5 million (Sh820.5 million) in 2019, closed its Nairobi plant and ceased operations 19 months ago.
Germany has two prominent currency printers -- Bundesdruckerei GmbH and Giesecke+Devrient GmbH -- and it is not clear whether either is the company that has been awarded the contract to print banknotes for Kenya.
Giesecke+Devrient is one of the firms that lost out to De La Rue in 2018, when it bid to print Kenya's new generation of banknotes.
De La Rue ended its currency printing operations in Kenya in the financial year ending March 2023, spending £15.1 million (Sh2.48 billion) to lay off more than 300 workers, pay lawyers and write off its assets.
De La Rue's exit marked an abrupt change in fortunes for a company that in late 2018 won an £85 million (Sh13.9 billion) three-year tender to design and produce Kenya's new generation of currency notes.
When he appeared before the committee last month, Dr Thugge told lawmakers that G+D replaces Britain’s De La Rue.
He said 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.
He promised to table all documents relating to the procurement of the German firm to print the new bank notes to replace the worn and torn 2019 series.
“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 new notes bear the signature of Dr Thugge and Treasury Principal Secretary Chris Kiptoo.
The new notes which are already in circulation have the year of print as 2024 and 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.
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.
Risk of stock out
Dr Thugge told lawmakers that 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 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.
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.
The banking sector regulator told the committee that the country would over the five-year contract receive 460 million, 50-shilling banknotes and 690 million, Sh100-shilling banknotes.
Kenya will also receive 260 million, 200-shilling notes, 170 million, 500-shilling notes, and 460 million banknotes of Sh1,000 denominations.
