MPs probe CBK's Sh14.2b money printing contract

A parliamentary committee is investigating how the Central Bank of Kenya awarded a Sh14.2 billion contract for replenishing Kenya shilling notes to a German firm.

Yesterday, it emerged that CBK had entered into a multi-billion-shilling contract with Giesecke + Devrient Currency Technologies for printing banknotes for a five-year period.

CBK Governor Kamau Thugge, while appearing before the National Assembly Finance and National Planning Committee yesterday, said the government resorted to the measure following the exit of De La Rue.

Mr Thugge revealed that under the new contract, the foreign firm was to print and replenish 460 million pieces of Sh1000 notes and 170 million pieces of Sh500 notes. For the Sh200 notes, it is expected to avail 260 million pieces and a further 690 million pieces for the Sh100 notes. It is also expected to deliver 460 million pieces of Sh50 bank notes during the contractual period.

The committee led by Molo MP Kimani Kuria heard that the firm had already delivered on replenishing a section of the Sh1000 notes with more to be introduced in a few months.

“Following the exit of De La Rue, the country was at risk of stockout of banknotes, with grave economic and national security implications… we knew the country needed this stock up process and that’s why we went through all legal processes in the tendering process,” submitted Thugge.

“I would also want to clarify that the firm is not printing new currency but replenishing the existing ones that are old and worn out,” he added.

The company had been single-sourced by CBK as opposed to going through an open tender system. “Who really owns this company? How did we settle on it? How many other jobs have they done? What was the real reason it was contracted?” questioned Eldas MP Adan Keynan.

“We will need you to furnish this committee with the documentation relating to the new contract including a justification of the closure of De La Rue,” he added.

The MPs further sought to know whether there was value for money and questioned the sudden exit of De La Rue, which was contracted in 2019.

“When you handpick a firm, how do you ascertain the cost of the contract? Also, on printing of these notes, will the existing ones continue being legal tender?” committee chair Kimani posed.

He also sought an explanation from the Governor and his team about how the current contract could cost Kenyans Sh14.2 billion for the production of 2.04 billion notes while it cost Kenyans USD 3 million more for the production of 2.35 billion banknotes in various denominations for the contract entered into with De La Rue in 2019.

“This committee needs to understand what is the firms’ scope of work. How can it be that this contract is USD 3 million cheaper than the one we got into with De la Rue in 2019? It shows there was certainly a big rip-off with our previous contract and it’s something that should be interrogated,” said Kimani.

Baringo MP Joseph Makilap queried the exact number of notes that had been worn out to the extent that CBK needed Sh14.2 billion to replenish them.

Thugge said the contract was okayed by the highest security and constitutional organs including the National Security Council and the office of the Attorney General.

“We will avail the documents. We have nothing to hide. We applied for the classified procurement process through the Treasury, which then went to the National Security Council, later the Cabinet which analysed and issued a directive to Treasury that we (CBK) proceed with procurement,” he said.

Currently, he said, the value of banknotes in circulation is Sh330 billion. Director of Currency Operations at CBK Paul Wanyagi explained that the accelerated wearing out of the notes as due to Kenyans rough handling them. “No matter what measures we take to enhance our currency, Kenyans rough-handle the bank notes meaning their life cycle is not long,” said Mr Wanyagi.