CBK Faces Fresh Scrutiny As It Opens New Coin Minting Tender

Nairobi, January 11, 2025– In a strategic shift aimed at enhancing transparency, the Central Bank of Kenya (CBK) has opened a prequalification process for a multimillion-shilling tender to mint new coins. This move follows criticism over past procurement practices, particularly the secretive awarding of a $109.42 million (Sh15 billion) contract for banknotes to the German firm Giesecke+Devrient Currency Technologies GmbH (G+D).

The CBK announced its intention to prequalify competent firms for coin minting services, aiming to rectify previous concerns about the lack of competitive bidding. “The Central Bank of Kenya is committed to ensuring a fair and transparent process,” stated the CBK, highlighting that only those prequalified will be invited to submit tenders for coin design, minting, and supply.

CBK Governor Kamau Thugge previously justified the confidentiality of earlier tenders, citing national security concerns due to the sensitive nature of currency printing. “An urgent procurement was necessary to avoid a banknote stockout, which could have had severe economic and security implications,” Thugge explained, referencing the closure of the Nairobi factory by De La Rue, the previous supplier.

However, Auditor General Nancy Gathungu’s recent findings have spotlighted the need for more openness, criticizing the absence of competitive bidding in the past. This new approach by the CBK seems designed to address these criticisms by broadening participation in the tender process.

De La Rue, once a dominant player in Kenya’s currency production, has significantly scaled back its operations in the country, attributing the decision to market demand and no anticipated orders from CBK for at least another year. This exit resulted in De La Rue incurring a Sh2.1 billion loss from winding down operations, with further financial implications detailed in their recent financial statements.

The current tender environment for coin minting has seen historical competition among international firms like Crane Currency from the U.S. and France’s Oberthur Fiduciaire, alongside the now more prominent G+D.

The prequalification criteria set by CBK require bidders to demonstrate a proven track record of supplying coins to central banks or equivalent authorities. The bank has also issued a stern warning against any form of canvassing or lobbying, promising automatic disqualification for violators.

Governance experts stress the delicate balance CBK must strike between transparency and the confidentiality required for currency production. The tender documents are expected to include detailed specifications and security features of the new coins, elements that necessitate some level of secrecy to prevent counterfeiting.

As the CBK navigates this procurement, the outcome will be closely watched by both local and international observers, aiming to see if this process can restore trust in the bank’s procurement practices while ensuring the integrity and security of Kenya’s currency.