Central Bank of Kenya (CBK) Thursday defended the Sh15 billion that will be used to print and supply the new-look Kenya currency that is triple the initial budget.
Central Bank governor Patrick Njoroge said the costs nearly matches what Kenya would have used annually over the next three years to replace ageing and defaced currencies, a pointer that the new currencies are expected to last beyond June 2022.
The older versions of smaller denominations will remain in circulation alongside the new ones launched on Saturday but after October 1, the older Sh1,000 note would be invalid.
The cost of printing new currency has increased by half to Sh15 billion amid delays and introduction of a new coat of varnish to reduce wear and tear and prolong their life in circulation.
The initial cost of printing the new currency had been quoted at Sh5 billion.
“Of course every year there is an additional cost of withdrawing and maintaining the currency,” Dr Njoroge told MPs yesterday in Parliament.
“The only difference this time is that the cost has been moved to one year and not spread for a period of three years.”
British security printing firm De La Rue International last year retained tender to print Kenya’s new-look currency after the Court of Appeal reversed a High Court decision that nullified the award.
Kenya’s plan to switch to new generation bank notes in compliance with the Constitution has delayed following court fights over the bank notes printing tender and opposition to its decades-old contract.
De La Rue has had a stranglehold on Kenya’s lucrative money printing business except for the period between 1966 and 1985 when another UK firm, Bradbury Wilkinson, did the job. There was opposition to extending the contract under the new currency.
The British firm in 2017 beat three other European banknote printing firms, German firm Giesecke & Devrient, Swedish firm Crane Currency and Oberthur Fiduciaire of France to the hotly contested and lucrative contract.
The delays could have escalated the costs.
De La Rue, which mints Kenyan currency at its factory in Ruaraka, Nairobi, said it was adding the fresh coat that will see paper money stay longer before getting defaced.
The more durable paper money is expected to slash printing costs and ultimately reduce cash cost.
Notes have been defaced or damaged due to poor handling, which prompted the CBK to issue regulations that provide a jail term of up to three years or a fine of Sh500,000 for those who mishandle notes and coins.