Kenya's virtual shilling to cut currency printing costs

Tuesday February 15 2022
Central Bank of Kenya

Central Bank of Kenya (CBK) building in Nairobi. FILE PHOTO | NMG


Kenya can make a significant saving in the cost of printing currency with the adoption of a virtual shilling, the central bank has said ahead of a public debate over the proposed rollout of its digital currency.

The CBK’s most recent currency printing contract, awarded to British security printer De La Rue in 2018 for the new generation banknotes, was worth £85 million (Ksh13.08 billion) over three years.

The initial batch of the notes, delivered in 2019, cost the monetary regulator £19 million (Ksh2.9 billion), with additional printing expected to fill the full quota and replace worn-out notes.

The savings, the CBK added, would however be weighed against the additional administrative costs it would incur to manage the virtual cash, known as a Central Bank Digital Currency (CBDC).

“CBDC has the potential to reduce the cost of printing money. However, it introduces the production costs (fixed and variable) of running CBDC infrastructure,” said CBK.

Most of the investments in the CBDC would, however, come up at the setting up stage, and it would likely be cheaper to administrate in the long run compared to hard currency which requires regular replacement due to wear and tear.


The government also recoups some of the cash printing costs through its 40 percent stake in the British multinational’s local subsidiary (De La Rue Kenya EPZ Limited) which prints notes and other security documents at its facility in Ruaraka.

The Treasury paid £5 million (Ksh769.5 million) for the stake, which De la Rue ceded partly in an effort to smoothen its relations with the government, which had been rocky for years.

The deal that took effect mid-April 2019 earned Kenya £0.8 million (Ksh123.1 million) as a share of net profits for the year ended March 2020, and a further £1.2 million (Ksh184.7 million) in the year ended March 2021.

Kenya’s high currency printing costs are primarily due to the fact that hard cash accounts for the bulk of payments, even with the rapid growth of mobile money usage in recent years.

The amount of money in circulation in the country stands at about Sh1.848 trillion, according to latest CBK statistics, of which Ksh253 billion ($2.2 billion) is in cash and notes outside banks, and Ksh1.498 trillion ($13.18 billion) in demand deposits.