As an independent facilitator of business in the country, the Government should not indulge in business, unless in very exceptional circumstances. If it finds itself in business, it is supposed to stick to one fundamental rule. It should not play any favourites. This is because as key facilitator of business, the presumption is that it will treat all competitors equally and accord all businesses a level playing field.
When the Cabinet approved the joint venture deal that will see the Government take up 40 per cent stake in De La Rue's local subsidiary, it shredded this supposition. It now stands accused of stifling competition in the currency business. The move is also against procurement practices and procedures as laid down in the Public Procurement and Disposal Act of 2005.
The deal is a grand irony when you consider that its main purpose is to offer some kind of stability in currency supply and end a long standing controversy over a tender signed by the two parties about four years ago. We are not currency experts, but our interpretation of the whole scenario is that like the (now rebranded )Kenya Power and Lighting Company, De La Rue is now a monopoly, granted a blank cheque to print our country's currency any how it feels.
Common human trait
Quality, which informs whether our currency will be easier to counterfeit or not, will no longer be an issue. We are not suggesting that De La Rue will start compromising the quality of our currency because of guaranteed business that the new deal offers. Neither are we suggesting that the British currency maker has been below par in its duties.
If anything, we feel Kenya's currency measures up to international standards because of De La Rue's work in the past. But it is a common human trait to hold back and sometimes be lethargic, especially when one knows that they are guaranteed of getting the job no matter what.
This is why companies are called upon after the end of each contract period to bid in order to safeguard quality and ensure better standards. De La Rue is unlikely to feel pressured to work harder if it knows the job is theirs for keeps. This is why we feel the contract should have been left open to competition.
While these forms of anti-business activities by the Government do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country. By granting monopoly to De La Rue, the Government has in effect told other external investors that their security is not assured whenever they are doing business here.
This could not be good for our country's image. At a time Government is working hard to exit direct involvement in business, it is unacceptable that it can purport to hastily enter into another a partnership with a business organisation.
There are claims that high level political interests could be at play in the matter. The Consumer Federation of Kenya (Cofek) has insinuated such. It has even gone ahead and said it may have to name and shame the personalities involved if the deal proceeds. While we don't know the truth about these claims, we can only pray and hope that they don't represent the truth.
The coming months and years ahead are going to be affected by whatever is happening today. The affects of a runaway money supply that may result from poor quality currency that can be easily counterfeited are well known.
Anyone who is a student of economics knows what is going to happen next, but like all great bubbles, its impossible to time when they will pop. The bit about currency is not different, especially if we don't put the necessary safeguards now. We hope the Government will take all these concerns to heart and make decisions that are good for our economy, now and in future.Last Edited: Tue 20th September 2011 at 09:44:24 AM