How Mutebile won battle on not printing money here

Investment minister Evelyn Anite signs the joint venture agreement between Uganda Printing and Publishing Corporation and Veridos Identity Solutions at State House Entebbe on Thursday. PPU PHOTO.

After almost three years of wrangling, the government finally signed the security printing deal with a German company, Veridos Identity Solutions Group.
Veridos signed a joint venture deal with the Uganda Printing and Publishing Corporation (UPPC) on June 11, 2016, after winning the bid. However, the disagreements between Bank of Uganda (BoU) and Ministry of Finance officials, particularly on whether government should print money from Uganda appear to have derailed the process.

In one of several meetings at State House, the Central Bank governor, Mr Emmanuel Tumusiime-Mutebile, and government economists at BoU stood their ground and requested the President to drop the idea of establishing a money printing factory in Uganda and accused the Finance ministry officials of ‘peddling lies’ and inflating the costs of the deal.

On November 2, 2016, Mr Mutebile officially wrote to Finance minister Matia Kasaija and warned that printing money in Uganda might compromise the security of the country’s currency as a result of “incidents of leakages of printing material or knowledge to counterfeiters.”

Mr Kasaija, in a December 2016 interview with this newspaper, called Mr Mutebile’s fears of an economic meltdown “foolish” and made it clear to the critics that with or without the backing of the governor, the project will go on as planned. Mr Kasaija also reminded the governor that he (Kasaija) is his boss and that as a minister for Finance, he is the one in charge of the economy.

Although the State House statement indicated that the MoU with Veridos was “for the printing of Uganda’s security documents such as banknotes, passports and cheques,” Investment minister Evelyn Anite, who signed the MoU, clarified that the deal signed in the presence of President Museveni at State House Entebbe on Thursday did not include money printing, a sticking issue in this multi-billion security printing deal.

“Veridos is not going to print money, it’s going to establish a factory in Uganda to print e-passports, driving permits, national IDs and other security documents,” Ms Anite said.

“We took a decision to leave out money printing because the Central Bank raised some issues. If they had consulted me, I would have clarified to them,” she said, referring to the statement from State House.

Explaining the contradiction in the two positions, a senior official said the minister’s position is the correct one. The official said the person who drafted the State House statement did not have opportunity to look at the detailed MoU.

In excluding the money printing from the deal with Veridos, a sources close to the Office of the Prime Minister said Ministry of Finance officials ‘strategically’ allowed those opposed to the government plan of printing money from Uganda to win the battle to increase victory chances of the war ahead.

The State House statement had indicated that the President, who criticised government officials for taking too long “to act on such crucial matters that affect the country,” backed the idea of establishing a security printing factory in Uganda and singled out the cost for printing money. He said the new venture would save Uganda a lot of money that it has been spending on printing documents from abroad.

“There was haemorrhage of resources that was unjustified. Money was going out to print currency notes for a long time. About $25 million (about Shs94b) was spent each year to create Ugandan currency,” the President was quoted to have said in the State House statement.

Ministers Esther Mbayo (Presidency) Matia Kasaija (Finance) and Ms Anite for Investment and Privatisation – signed the deal on behalf of Uganda while Dr Herman Steringer, the chief operating officer, signed the document on behalf of the German company.

Under the agreement, Veridos is expected to put in EUR 20m (about Shs86b) as initial investment with equity contribution of EUR 4.2m (about Shs18b).

UPPC and Veridos will also borrow an additional EUR 15m (about Shs64b) under a joint venture deal where government is expected to be the majority shareholder in a new business to be called Uganda Security Printing Company with government having 51 per cent stake and Veridos with 49 per cent.

The government also agreed to buy 300,000 e-passports for two years. Veridos will also establish personalisation centre for national IDs, and within 22 months, a factory for e-passports must be in place. A new security printing will also be brought into the country after revamping UPPC structures.