British currency printing firm De La Rue has suspended its printing operations in Kenya citing reduced orders and a poor economic climate.
The shock move announced yesterday by the UK-based firm sparked jitters among hundreds of its local employees and concerns over the supply of the country’s cash and coins requirements.
De La Rue, which operates from Nairobi’s Ruaraka area, designs and produces banknotes and banknote security features for the Central Bank of Kenya (CBK).
The firm retained a Sh10 billion-a-year tender to print Kenya’s new-look currency in 2018, which paved way for the retirement of the Sh1,000 older generation notes.
But for the next 12 months, De La Rue said on Friday it has suspended banknote printing operations in Kenya on reduced demand.
It said it was exploring business opportunities with a view to restarting production “if the economic climate permits”.
Weekend Business could not immediately get assurances from Kenyan authorities that the move by De La Rue would not affect the supply of currency.
The UK firm employs 300 workers at its Ruaraka factory directly and a further 3,000 indirectly.
It has had a stranglehold on Kenya’s lucrative money printing business except for the period between 1966 and 1985 when another UK firm, Bradbury Wilkinson, did the job.
De La Rue has also been expanding its Nairobi facility to become a regional hub for East Africa. It also works in close partnership with the Kenyan authorities on the delivery of the country’s passport.
“Currently employing in the region of 300 local people, De La Rue has contributed extensively to the local economy over the last two decades through factory investment, the payment of taxes, wages and local purchases,” the company says on its website.
The announcement of halting its Kenya operations comes barely a week after the UK firm suffered a major financial blow after the High Court ordered De La Rue to pay Kenya Revenue Authority (KRA) Sh1.1 billion from a long-running tax dispute with the taxman.
The company addressed the legal fight with KRA in its update to investors on Friday.
The recent High Court ruling upheld the 2021 judgment of the Tax Tribunal ordering the firm to pay historical taxes due for the years 2013–17.
De La Rue said it was disappointed with the ruling, and added that its Kenyan subsidiary was preparing a further appeal.
De La Rue operates in the country through a joint venture with the Kenya government, which holds a 40 per cent equity share.
The company, however, said the joint venture remains active.
The suspension of activities comes slightly over a decade after De La Rue threatened to stop local currency printing operations in the country if negotiations for a joint venture with the government failed.
It also threatened at the time to pull out of Kenya, saying there were other countries willing to sign long-term investment deals with it.
De La Rue at the time was referring to stalled joint venture talk days after the firm faced criticism over its local operations.
Its Nairobi factory is its regional base for the export of its products to central banks and currency-issuing authorities around the world.
The UK firm estimates it contributes Sh1.25 billion to the Kenyan economy every year.
“The banknotes made in the facility are circulated in more than 30 countries worldwide, a tribute to the skill and dedication of the local workforce employed by De La Rue,” it says on its website.