Cabinet gives nod to De La Rue joint State venture
The De La Rue building in Nairobi. The Cabinet has given a fresh approval to the government’s joint venture plan with British currency printer De La Rue. Photo/FILE
What you need to know:
Failure to agree on the terms for the joint venture had paraylsed a new contract that was approved in 2011 by former Mwai Kibaki’s government.
The Cabinet has given a fresh approval to the government’s joint venture plan with British currency printer De La Rue, setting the stage for printing of new generation cash.
Under the arrangement, the government will have a 40 per cent equity stake in De La Rue to entitle it to revenues from the lucrative business. Kenya is racing to print a new-look currency after missing the August 2015 deadline set by the Constitution.
The supreme law bars use of portraits of individuals, as is currently the case with the currency in circulation. “Under the new arrangement, a special purpose vehicle will be formed through which the government will acquire a 40 per cent shareholding in De La Rue Kenya Ltd,” reads the Cabinet brief dated July 28.
Failure to agree on the terms for the joint venture had paraylsed a new contract that was approved in 2011 by former Mwai Kibaki’s government. De La Rue has enjoyed a monopoly of printing Kenya’s currency since January 1993, when it signed a 10-year contract with Mr Kibaki’s predecessor – retired President Daniel arap Moi.
10-year exclusive currency printing
De La Rue had demanded to be given a 10-year exclusive currency printing contract as a condition for entering into a joint venture with the State, sparking opposition from MPs and civil society groups. It later dropped the condition.
Yielding to the firm’s demand would be out of tune with public procurement laws that encourage competitive bidding for public tenders. The government had agreed to pay Sh700 million in exchange for the equity stake in De La Rue.
De La Rue had in 2012 threatened to close down its money printing factory in Ruaraka if the Central Bank of Kenya failed to grant it exclusive printing rights.
The firm had told the parliamentary Public Accounts Committee, which was probing the matter that its business would be rendered unprofitable without the exclusive printing agreement.
De La Rue’s investments in Kenya stood at Sh3 billion in 2014 with over 300 Kenyan employees.
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