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Business Daily : October 15th 2013
19 Tuesday October 15, 2013 | BUSINESS DAILY BY GEORGE NGIGI The cost of printing bank notes and minting coins doubled to Sh2.4 billion last year, with the Central Bank of Kenya (CBK) attributing the jump to expenses of printing new generation currency under the Constitution. CBK’s annual financial statements for up to June this year show currency production costs rose by Sh1.2 billion in the past 12 months, even though the regulator is yet to make public the progress of the expected switch to new-look cash. The 2010 Constitution required production of new currency that does not bear the image of an individu- al, unlike currently where Kenyan notes and coins bear portraits of former presidents. “Currency costs increased to Sh2.4 billion from Sh1.2 billion in 2012 as the bank makes investments in the new generation currency to comply with constitutional requirements,” said CBK in its financial statements. The Constitution requires the new currency to be in circulation by Febru- ary 2015. The current stock of cash will continue to be legally acceptable until it is phased out. The Central Bank, which mainly outsources production of cur- rency, did not provide details on what had led to the sharp increase in costs. “We are not in a position to com- ment on the detailed aspects of the ac- counts until deliberated upon by the Public Investments Committee of Par- liament,” said CBK governor Prof Njuguna Ndung’u told Business Daily. In August, the Secre- tary to the Cabinet Francis Kimemia said the Cabinet had approved the design of new generation currency, and was working on a pro- duction date of 2015. The de- signs were said to have been selected from the proposals made by the public. “New currency with our country’s heritage as its key features will be unveiled in the next two years. Cabinet approved the proposal that is set to be ready earliest February to May 2015. Latest being January 2016 which is the worst scenario,” said Mr Kimemia in a tweet sent on August 17. At present, Kenyan notes and coins bear the images of the first two presi- dents of the country, Mzee Jomo Ken- yatta and Daniel arap Moi. The Sh40 coin, which was released in 2003 to mark the country’s fortieth Independ- ence anniversary, bears the image of former President Kibaki. The Sh100 and Sh50 notes have a one-year life span while the others have a two-year utility period. The coins have a longer lifespan of 25 years. As per the financial statements, the currency in circulation, which repre- sents the nominal value of all notes and coins held by the public and commer- cial banks, increased by 15 per cent. In June, the total cash in circulation was Sh183 billion, compared to Sh159 bil- lion a year earlier. Centre of controversies A parliamentary committee heard last year that the Central Bank had procured from De La Rue Company four interim orders of current generation bank notes totalling 1,487,050,000 since 2006 at a cost of Sh5.6 billion. Currency printing contracts have been the centre of controversies in Kenya, with the public said to have lost more than Sh1.8 billion in irregu- lar procurement of the services. In a report tabled in Parliament last year, the Parliamentary Accounts Com- mittee (PAC) said that interferences by the National Treasury (then Ministry of Finance) which cancelled a contract between CBK and printing firm De la Rue had seen the public pay Sh1.8 bil- lion more than the initial amount. The government has stated its in- tentions to buy a 40 per cent stake in De La Rue’s operations in Kenya at an estimated cost of Sh650 million in a deal that would see the firm increase its investment in the country and pro- duce the currency locally, cutting on the production costs. The deal is yet to be completed and De La Rue is still engaged on short-term annual contracts. email@example.com MONEY & MARKETS NEWS I REVIEWS I ANALYSIS Cu≥≥ency p≥inting cost ≥ises sha≥ply to Sh2.4 billion BANK NOTES CBK attributes increase to the new generation money yet to be released Prof Njuguna Ndung’u, the CBK governor. He said he would only comment after a parliamentary team completes reviewing the report. FILE We a≥e not in a position to comment on the detailed aspects until delibe≥ated upon by the PIC NJUGUNA NDUNG’U, CBK GOVERNOR Currency production costs (Sh bn) Xxxxxxx 2012 SH1.2B 2013 SH2.4B SOURCE; CBK Uchumi fi≥st Kenyan fi≥m to t≥ade on Rwanda exchange BY JOHN GACHIRI Uchumi Supermarkets became the first Kenyan company to trade on the Rwanda Stock Exchange (RSE) on its first day of cross-listing, moving 3,600 shares. Rina Hicks, head operations at Fa- ida Investment Bank, which has an of- fice in Kigali, said that investors traded Uchumi share in lots of 1,000, 2,000 and 600 at Rfw175 (about Sh22.29) in yesterday’s trading. On the Nairobi Securities Exchange 86,600 Uchumi share was traded at an average price of Sh21 each. “Uchumi Supermarkets share began trading on the Rwanda Stock Exchange (RSE) after the retail chain received an approval from the Rwandan authori- ties to cross list its 265,426,614 shares,” said the RSE in a statement. Nation Media Group (NMG) and KCB Group are also cross-listed on the RSE. Nation Media Group, KCB Group, East African Breweries Limited, Kenya Airways and Jubilee Holdings, which are primarily listed on the NSE, are also cross-listed on the Uganda Securities Exchange (USE) and Dar es Salaam Securities Eexchange (DSE). Centum Investments is also cross- listed at the USE while Umeme, whose primary listing is on the Kampala bourse, is cross-listed at the NSE. Uchumi is gearing up for a Sh1.5 bil- lion rights issue, and has also applied to cross-list its shares on the DSE and USE where it already has subsidiaries. Cross-listing on all exchanges is meant to increase the pool of poten- tial investors for the planned rights issue. “As our drive towards regional growth gains momentum, so has our desire to make Uchumi share accessible to more stakeholders across the region,” said Uchumi chief executive Jonathan Ciano in a statement. The retail chain is raising cash to finance expansion, which will also in- clude opening a branch in Rwanda. “It is, therefore, timely and ideal that as we plan to set Uchumi branches in this market that we also empower in- vestors here to stake a claim to the own- ership of Uchumi, and all our East Afri- can Citizens should pride themselves for owing a piece of the supermarkets”, said Mr Ciano. The supermarket chain plans to sell 100 million shares to sharehold- ers through a rights issue. In May, Uchumi Supermarkets ap- pointed Faida Investment Bank as the transaction adviser and sponsoring bro- ker, Equity as the receiving bank, Ham- ilton Harrison & Mathews Advocates as the legal adviser and Ernst &Young as the reporting accountants. The supermarkets chain’s profit af- ter tax for the full year ended June 2013 jumped 30.31 per cent to Sh357.01 mil- lion compared to Sh273.97 million as at June 2012 despite a rise in costs, partly attributed to branch expansion. The growth, which saw the super- market’s chain open new branches in Ongata Rongai in Nairobi, Natete in Kampala and at the Eldoret Sugar Pla- za resulted in an increase of customer numbers by 10 per cent to 24 million from 22 million. Growth The retailer’s profit after tax for the full year ended June 2013 jumped 30.31pc to Sh357.01m compared to Sh273.97m as at June last year.
October 14th 2013
January 22nd 2014