A joint venture between the government and British security printer De La Rue took effect Thursday, the London Stock Exchange (LSE)-listed multinational announced.
The State acquired a 40 percent stake in De La Rue Kenya EPZ Limited, the Kenyan subsidiary of the British multinational, for Sh660 million.
The commencement of the joint venture now lines up the government to share in the earnings of the currency printer, which was last year handed a Sh11.2 billion (£85 million) three-year contract to design and manufacture Kenya’s new generation currency.
“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 UK firm said in a trading update.
“De La Rue is delighted to have extended our 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.”
The multinational will continue to operate and manage the business and will appoint three of the five directors of the joint venture’s board.
The National Treasury has nominated Samuel Kairu Njonde as the first chair of the board in which he will be joined by Treasury Secretary Henry Rotich.
The deal now gives the government, the largest customer of De La Rue, an opportunity to recoup part of its currency printing expenses through profit sharing.
The Sh11.2 billion contract will see De La Rue print banknotes that will not bear the faces of individuals such as former presidents.
The conglomerate is also betting on the joint venture to smoothen its relations with the government, which had been rocky for years.
Besides local customers including the Kenyan government, the De La Rue factory also prints currency and documents for export to overseas clients.
Kenya is likely to continue relying heavily on hard cash for payments.
Cash accounts for 98 percent of total payment transactions in the country, according to a report by McKinsey and Mastercard Advisers.
However, increased uptake of digital payments enabled by cards, internet and mobile telecommunications could reduce its dominance in the long term.
Singapore, Netherlands and France have been the most successful in weaning themselves off cash, with only 39, 40 and 41 percent of their transactions settled in hard currency respectively.
The stock of outstanding notes and coins in Kenya stands at about Sh1.4 trillion, according to Central Bank of Kenya (CBK) statistics.
The new currency will circulate concurrently with the current notes and coins.