CBK keeps cards close to chest on new-look currency

money Markets Central Bank of Kenya governor Patrick Njoroge. PHOTO | SALATON NJAU 

The National Treasury and the Central Bank of Kenya (CBK) have maintained silence over the timelines for the printing of a new-look currency to meet a constitutional requirement.

This comes at a time experts say navigating the procurement process can be long-winded at times.

“I remember I went through this exercise. We tendered and then re-tendered. It takes a lot of time – from tendering to delivery to the warehouse,” said Dr Andrew Mullei, who served as governor of the Central Bank of Kenya from 2003 to 2007.

“Remember before you release them, you have to educate the public about the new notes.”

The Constitution bars the use of portraits or images of individuals on currency, stating that notes and coins should only bear images that depict or symbolise an aspect of Kenya, meaning the current notes in circulation violate this rule.

The first attempt to roll out the new look currency was shrouded in secrecy. It was stopped but restarted afresh after being engulfed by a tendering controversy forcing CBK to cancel the initial tender.

Missed deadline

MPs have questioned whether Central Bank is in breach of the Constitution by missing the stipulated deadline raising the prospect of a crisis. They have also questioned the absence of public participation in the process.

CBK did not respond to Smart Company’s numerous requests for comment on the matter. This is despite mounting uncertainties on the lagging deadlines.

While Dr Mullei did not discuss specifics of the expected process of introducing the new-look currency by his former employer, he generally observed that the tendering processes are lengthy and there is need to prepare ahead and engage Kenyans.

“This process takes time” said Dr Mullei.

The new-look currency is expected to have new features that would enable the visually impaired to use them.

They are expected to be in notes of 50, 100, 200, 500 and 1,000 shillings. Their introduction would be accompanied by a massive public campaign to sensitise wananchi on the same.

This would be followed by the withdrawal of the current currency in phases.

In 2012, CBK sought a new image for the local currency notes and coins in adherence to the current Constitution.

The regulator had called for proposals on designs whose themes reflect a new chapter in Kenya’s history in line with the law and to depict the country’s prosperity as outlined in Vision 2030.

The last new denomination and currency design was the Sh40 coin in 2003, which has a portrait of retired President Kibaki.

CBK began printing Kenyan bank notes in 1966 under the mandate given to it by the Central Bank of Kenya Act cap 491.

CBK Governor Patrick Njoroge told the Senate Committee on Finance, Commerce and Economic Affairs on March 3 last year that the bank missed the planned August 2015 constitutional deadline following the cancellation of the tender on March 24.

The Cabinet under President Uhuru Kenyatta chairmanship gave the CBK the go-ahead to develop and begin rolling out the new notes in February 2015. The lucrative tender for the design of the new-look currency was cancelled after two bidders quoted a zero price.

The bank in consultation with the Attorney-General ruled the move illegal.

Four companies — British printer De La Rue, its competitor French firm Oberthur Fiduciaire, German banknote printer Giesecke & Devrient and American firm Crane Currency — had been prequalified from eight money printing firms.

However, both British printer De La Rue and the French firm Oberthur Fiduciaire set their bid at zero price, which did not make any economic sense in such a lucrative tender to design the new currency notes.

Dr Njoroge said Central Bank cancelled the tender on March 24 2015. At the time, the office of the bank governor was vacant. Dr Njoroge took office in June 2015.

Dr Njoroge, said the Central Bank was left with no option but to cancel the tender.

“The companies with zero price were willing to do it for nothing but there was no way the Central Bank would accept that. It was not a valid contract. It was laughable to say the least,” Dr Njoroge told the Senate Committee last year.

Legislators had initially prodded why the new look currency faced delays, citing the prospect of a constitutional crisis were this to be challenged in court.

Educate Kenyans

The Governor had said Sh18 billion would be required to withdraw the currency now in circulation over a three-year period and this would require a campaign to educate Kenyans.

Dr Njoroge (right) had said the bank would like to issue the new notes in September 2017.

He had said issuing them a year to the election year would create security risks.

The costly process of making new banknotes requires design and layout, development and integration of advanced security features.

Dr Njoroge had said they had set in motion the process to develop new notes, adding that a new international tender for the design would be issued.

Dr Njoroge had also told the Senate that he had been flooded with “many requests for meetings” by unnamed firms ostensibly seeking to sway the decision for the tenders in the new look currency tender in their favour.

He said he had interpreted the requests for meetings as “interference” and declined.

-Smart Company