A joint venture between the government and British banknotes and security printer De La Rue officially commenced on Thursday April 18th 2019. This was made public via an announcement by the London Stock Exchange (LSE)-listed multinational.
The Kenyan government, acquired a 40 percent stake in De La Rue Kenya EPZ Limited, which is the Kenyan subsidiary of the British multinational, for 660 million Kenyan Shillings.
The commencement of the joint venture properly positioned the government in such a way that they can share in the earnings made by the currency printer, which was last year handed a three-year contract of £85 million Pounds (11.2 billion Kenyan Shillings) to design and manufacture Kenya’s new generation currency.
This will also give Kenya which is De La Rue’s largest customer, an opportunity to recoup part of its currency printing expenses through profit sharing.
In a trading update the UK firm said “De La Rue plc today announces the commencement of its joint venture with the Government of Kenya on its currency and secure printing site in Nairobi, the Republic of Kenya,”.
The firm made it known that it is delighted to have extended its longstanding relationship with the Government of Kenya into an ever closer partnership.
“The joint venture fits with our strategy of expanding into key growth markets through long-term partnerships and local investment.” It added.
De La Rue, will continue to operate and manage the business and will also appoint three of the five directors of the joint venture’s board.
Samuel Kairu Njonde, was nominated by The National Treasury, as the first chair of the board. Me. Njonde will also be joined by Treasury Secretary, Henry Rotich.
The 11.2 billion Kenyan Shillings contract awarded to De La Rue, will see it print banknotes that will not bear the faces of individuals such as former presidents.
The firm is also banking on the joint venture to smoothen its relations with the government, which had been rocky for years.
Apart from customers like the Kenyan government, the De La Rue factory also prints currency and documents for export to overseas clients.
According to a report by McKinsey and MasterCard Advisers, cash accounts for 98 percent of the total payment transactions in the country. With that being the case, the East African nation is likely to continue its heavy reliance on physical cash for payments.
Increased uptake of digital payments enabled by cards, internet and mobile telecommunications however, could reduce its dominance in the long term.
Countries like Netherlands, Singapore, and France, have been the most successful in ridding themselves of physical cash transactions, with only 40, 39 and 41 percent of their transactions respectively, were settled in hard currency.
The Central Bank of Kenya (CBK), puts the stock of outstanding notes and coins in Kenya at an estimate of about 1.4 trillion Kenyan Shillings, according to its (the CBK’s) statistics.
The new currency will circulate concurrently with the current notes and coins.
Founded in 1821, De La Rue Plc, is a British banknote manufacturing, security printing of passports and tax stamps, brand authentication and paper-making company with its headquarters in Basingstoke England, as well as a factory on the Team Valley Trading Estate in Gateshead, in addition to other facilities in Loughton and Bathford.
Its overseas offices are in Kenya, Sri Lanka and Malta.
