Cabinet approves joint venture in currency printing with De La Rue

The controversial money printing contract awarded to British currency printer De La Rue can now get underway.

The approval from the Cabinet brings to an end a decade-old stand-off over the lucrative deal.

A communication from the Cabinet meeting on Thursday indicated that the contract, which was first approved in 2011 by former President Mwai Kibaki’s government, can now proceed.

“Cabinet approved a joint venture in currency printing between the Government of Kenya and De La Rue Currency and Security Printing (K) Limited,” read the Cabinet brief.

Under the joint venture, the Government of Kenya will take a 40 per cent stake while De La Rue Kenya factory will take a 60 per cent shareholding.

SINGLE CURRENCY REGIME

The developments brings to an end a long standing dispute that saw the British money printer face opposition from legislators and civil society groups alike over its conditions for entering into the joint venture.

In April this year, De La Rue dropped its condition of a 10-year exclusive currency printing contract as a prerequisite to forming the joint venture with the government.

The British firm made the about turn, citing expected sharp rise in demand for bank notes within the East African Community under the planned single currency regime.

It is this change of heart that informed the government to reconsider the partnership agreement.

In May 2013, the currency printing company threatened to close down its local subsidiary if the Kenya government did not grant it the exclusive rights after CBK said it would not guarantee it business.

RENDERED UNPROFITABLE

In a presentation to the parliamentary Public Accounts Committee, which was investigating the 10-year exclusive contract, it argued that its business would be rendered unprofitable without the exclusive agreement.

However, critics accused De La Rue of pursuing a monopolistic agenda by trying to lock out rivals from the lucrative currency printing business by insisting on a 10-year exclusive contract.

The British firm has had a monopoly of printing Kenya’s currency since January 1993, when it signed a 10-year contract with the government of former President Daniel arap Moi.

Cabinet cited the firm’s massive investment in the country and its contribution to the country’s revenue since establishment in 1992.

“The company’s investments in Kenya total over Sh3 billion. Currently, the company employs over 300 Kenyans and contributes to tax revenue and foreign exchange earnings,” noted the Cabinet brief.