‘Forget Malta, print in Kenya’ – De La Rue

British firm De La Rue defended Kenya's government over its decision to print money in Nairobi, rather than in Malta, where production costs are cheaper.

In a reaction to last week's revelations by Kenya's parliamentary accounts committee, which accused Nairobi's government of having made Kenyan taxpayers lose "billions in an exploitative and suspicious money-printing contract" through single sourcing, De La Rue simply insisted the deal was a "good investment" for Kenya.

The company warned however that should the deal not go through, Kenya stood to lose the firm's presence in the country.

The Kenyan public accounts committee slammed Nairobi's government for not granting the money-printing contract to De La Rue in Malta, which would have saved Kenyan taxpayers "billions" in Kenyan shillings.

Although the Kenyan government had the option of getting its currencies printed far cheaper in Malta, it chose to give the order to the Ruaraka-based De La Rue.

According to the committee, government did so ostensibly to protect 260 Kenyans who would have been rendered jobless if the high-security printing firm did not get this lifeline - albeit at a crushing cost to taxpayers.

Details emerged how the Kenyan taxpayer was paying more to sustain printing of currency way above market rates when a parliamentary committee probed the tendering for printing of local currency.

Central Bank of Kenya Governor Njuguna Ndung'u admitted last week  to approving six interim orders for new currencies, which were costlier than the quotation submitted by Malta's De La Rue factory in an open international tender, which got cancelled in 2006.

Ndung'u tried to justify the additional cost to the taxpayer, saying it saved jobs at De La Rue, which would have been lost if production was done abroad.

But the parliamentary committee questioned the rationale of paying the additional money to De La Rue - nearly three times more than competitive international market rates.

The international open tender returned a quotation of €32.5 million for the production of 1.7 billion pieces in Malta.

But reacting to the reports, De La Rue said that the proposal to enter into a joint venture with the Kenyan government to set up a currency printing firm, was "a good investment for the country".

Mark Crickett, the Commercial Lead for the Kenya Joint Venture,  said that contrary to speculation , that they were out to fleece Kenyans, the deal portends many benefits for the economy.

If approved, the deal will see the government take up a 40% stake in a new company to be known as De La Rue EPZ Kenya Limited.

"A joint venture with De La Rue does obviously maintain a critical piece of national infrastructure in Kenya and the security of local currency manufacture and there is some strategic benefit for the country in having this facility on shore," he pointed out.

If the two parties sign the agreement, the new company will be formed by hiving down operating assets belonging to Thomas De la Rue Currency and Security Print Kenya that has been operating in the country since 1994.

According to the firm, the logic behind the move was that the Kenyan government would be inheriting a 'clean' company without incurring any financial liabilities.

The negotiations - which have dragged on for about five years - were started after the government cancelled an agreement entered into between the minting firm and the Central Bank of Kenya in 2007 to print new generation currencies.

The revocation of that contract, - which would have seen the country pay less for its notes - has kicked off a storm with Members of Parliament reading corrupt intent by politically connected individuals.

Had the 2006 contract been allowed to run, it would have cost Kenyan taxpayers almost double the cost for printing in Malta.

Upon its termination however, the CBK has had to place short term orders to meet the demand for currency notes in the country.

Meanwhile, De La Rue threatened that if a deal does not materialise, the company "would be forced to fold as there would be no guaranteed business to sustain their operations".

Currency printing at Kenya's Ruaraka factory accounts for over 90% of the operations with Kenya taking up about 60% of that.

The plant is also used to print other countries' currencies and other security documents including passports, driving licences, authentication labels and tax stamps.

Should it close down, Crickett noted that this would be a loss to Kenya which is just one of the four countries in sub-Saharan Africa which produces its notes within its territory.

Besides losing its standing as De La Rue's Africa hub, the closure of their operations would also bring with it the loss of some 260 jobs.