The Central Bank of Kenya (CBK) has come under scrutiny following the revelation that the printing of new banknotes will cost taxpayers Ksh 14 billion over the next five years. CBK Governor Kamau Thuge defended the deal before the National Assembly Finance Committee, explaining that the tender was awarded to a German printing firm after thorough consultations with the National Security Council (NSC). The CBK governor emphasized that the procurement process was conducted in compliance with legal procedures, particularly highlighting the sensitive nature of the deal, which necessitated a single-sourced, classified procurement.
The Procurement Process
Governor Thuge outlined the process that led to the awarding of the tender to the German firm, stressing that the CBK had followed all necessary legal frameworks. He pointed out that given the sensitive nature of currency printing, it was imperative to adhere to a single-sourced, classified procurement process, which was done under the guidance and approval of the NSC. The governor assured the committee that all procedures were transparent and in accordance with the law, with the aim of ensuring the security and integrity of Kenya’s currency.
The decision to engage a German firm raised questions from some quarters, particularly in light of the recent exit of De La Rue, the British company that had long been responsible for printing Kenya’s currency. Thuge clarified that De La Rue’s departure was a business decision made solely by the company, and the CBK had no influence over it. He absolved the CBK from any blame regarding the firm’s exit, stating that the central bank’s focus was on ensuring that Kenya’s currency needs were met in a secure and cost-effective manner.
The Cost and Implications
The Ksh 14 billion price tag for the new banknotes has drawn mixed reactions, with some questioning the necessity of such an expenditure. However, Governor Thuge argued that the cost is justified given the high standards required in currency production. He emphasized that the new notes would feature enhanced security features to prevent counterfeiting, which remains a significant concern. Additionally, the governor highlighted that the contract spans five years, implying that the cost is spread over an extended period and not a one-time expense.
Thuge also pointed out that the decision to print new banknotes aligns with the CBK’s mandate to maintain the integrity of the currency. He argued that the introduction of new notes with updated security features is crucial in safeguarding Kenya’s financial system and ensuring that the currency remains trusted both domestically and internationally.
The De La Rue Shareholding Issue
As the CBK defends its actions, the focus now shifts to the National Treasury, which is expected to appear before the National Assembly to explain the fate of the 40% shareholding the Kenyan government acquired in De La Rue. This stake was part of a strategic partnership aimed at ensuring the continued production of Kenyan currency within the country. With De La Rue’s exit, questions arise about the future of this investment and how the government plans to recover or repurpose the funds involved.
The Treasury’s upcoming appearance before the parliament is highly anticipated, as lawmakers seek clarity on how the government plans to address the implications of De La Rue’s exit. The issue of whether the government’s investment will be written off, recovered, or transferred to another venture remains a topic of significant interest.
Conclusion
The CBK’s defense of the Ksh 14 billion currency printing deal underscores the complexities involved in securing a nation’s currency supply. While the central bank maintains that all procedures were followed, the high cost and the exit of De La Rue have raised concerns that will need to be addressed comprehensively by both the CBK and the Treasury. As Kenya moves forward with its new currency plans, transparency and accountability will be key in ensuring public trust in the process.
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