Fresh row erupts over money printing deal

Central bank governor, Mr Emmanuel Tumusiime-Mutebile

KAMPALA- A multi-billion currency printing deal has kicked up a fresh wrangle between Finance ministry bureaucrats and President Museveni over the cost of the deal.

Although senior Finance ministry officials working with some of the prospective foreign companies had convinced the President that establishing a currency factory in Uganda would cost the taxpayers in excess of $80m (about Shs287.7 billion), officials from Bank of Uganda and some technocrats from Finance ministry put the cost at less than $20m (about Shs71.9 billion).

Unpacking what sources have called “the lies”, a team from Bank of Uganda backed by some officials from the ministry of Finance informed the President that currency printing is an occasional activity and that money is not printed annually as they had told him. They had told the President, according to sources, that Uganda spends between $70m to $80m annually on printing its money.

Sources have also told Sunday Monitor that 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 in one of the several meetings with the President, another source said, the BoU team accused the Finance ministry officials of peddling lies and inflating the costs of the deal.

Although Uganda Printing & Publishing Corporation (UPPC) had signed a joint venture with a German firm, Veridos Identity Solutions GMBH, on June 11, 2016, Finance ministry officials on January 22 wrote to two other foreign companies, inviting them to submit bids in accordance with the agreed specifications. Sunday Monitor couldn’t get the details of the agreed specifications as government officials, including State House aides, remained tight-lipped on the latest developments.

The other companies the ministry of Finance has invited to submit bids amid growing opposition from Bank of Uganda, include the Mühlbauer Group, a one-stop-shop technology partner for the production and personalisation of cards and passports, and De La Rue plc, a banknote printing, security printing and papermaking company with headquarters in Basingstoke, Hampshire, England, which has printed Uganda’s currency for the last 50 years, also voiced its objections.

The proposals from the two companies, according to sources, will be evaluated alongside Veridos Identity Solutions GMBH.

Complicated deal
Sources have told Sunday Monitor that the claims of inflated figures have complicated the currency printing deal to the extent that the deal is now on the verge of collapse after the President ordered economists to study the deal. It’s also not clear whether the President will push through the money printing deal without the support of BoU, the statutory body mandated to print money.

However, after getting conflicting figures and studying the Bank of Uganda’s letter to Mr Kasaija, dated November 2, 2016, in which the governor 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,” the President, according to sources, asked economists in the ministry of finance to study the viability of printing of money in Uganda.
Last year, the BoU governor also indicated that “this activity involves the use of highly specialised materials that range from paper and ink, embedded with various security features that are extremely restricted and heavily patented.”

Daily Monitor broke the story of the disputed currency printing deal last year. The paper reported that the joint venture between UPPC and a German firm, signed on June 11, 2016, was negotiated amid tacit objections from BoU and some technocrats in the Ministry of Finance.

Although State House officials did not want to comment on the deal, when contacted yesterday to explain what’s going on, Ministry of Finance spokesman Jim Mugunga said: “I am aware that there are ongoing discussions on ensuring that as a nation, we gain in-country capacity for security printing. I am not privy to the information relating to inflated costs you are talking about or a row, if any; related to currency printing procurement. As far as I know, currency is a matter that Bank of Uganda is best placed to explain.”

Mr Kasaija and ICT and Information minister Frank Tumwebaze have since defended the idea of establishing a money-printing factory in Uganda as a step in the right direction and applauded the President’s prudence. Mr Kasaija has since reminded Mr Mutebile that he –Mr Kasaija, is the one in charge of the economy, and disregarded the governor’s warning and called the fears of an economic crisis “foolish”.