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Money printing firm De La Rue is winding down its banknote printing operations in the country. This follows the Central Bank of Kenya’s (CBK) decision not to issue new orders, a move that has now been linked to a quietly awarded tender to a foreign competitor.
The wind-down of De La Rue’s operations in Kenya brings major changes for the country’s currency production, putting jobs at risk.
No orders, no business
In January 2023, De La Rue announced it was not expecting any new banknote orders from the CBK for at least a year. As a result, the company began closing its currency printing operations in Nairobi.
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Owing to current market demand, and no expectation of any new banknote orders from the Central Bank of Kenya for at least the next twelve months, De La Rue took the decision to wind down its currency printing operations in the country.
This decision came shortly after CBK reportedly awarded a Sh15 billion banknote printing tender to a German company.
The contract was issued without much public attention, but has since been flagged by the Auditor General, who questioned the transparency and fairness of the procurement process.
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De La Rue offices in Kenya
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Financial losses and factory shutdown
Shutting down its Kenyan currency business came at a cost for De La Rue. The company reported a £6.4 million (Sh1.2 billion) impairment due to the closure.
This included losses linked to machinery, product development, and incomplete projects in Kenya.
Recoverability assessment and impairment charges related to plant and machinery, capitalised product development costs and assets under construction resulted in a total impairment of £6.4m.
De La Rue also confirmed that there is no recoverable value expected from its shuttered Kenyan units. In simple terms, the company does not expect to get back any of the money it invested in its now-closed operations in Kenya.
The losses from Kenya had a major impact on the company’s wider performance. In its financial report, De La Rue noted that costs linked to Kenya contributed to a 52.9% drop in adjusted operating profit in its Currency division down to just £6.4 million.
Hundreds of jobs expected to be lost
The Nairobi printing plant employed more than 300 people. With the wind-down of operations, many of those jobs are now at risk.
While the company did not give a specific number, it did record additional losses related to the shutdown, including £1.1 million in impairment of software development costs tied to its Kenyan Authentication business.
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Kenyan Currency Notes
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This means the impact is wider than just currency printing. Other operations, such as secure document development, are also being scaled down or closed.
A tough year for De La Rue
The problems in Kenya are just part of wider challenges facing De La Rue around the world. The company has been cutting costs and trying to improve its operations globally.
In FY24 we also recognised exceptional development costs in relation to the wind-down of Kenya.
Despite growth in its Authentication division which deals with digital security the company has struggled with inflation, falling orders, and expensive restructures.