Bank plans to cut foreign currency spending by printing banknotes in Ethiopia
The Bank announced a tender two weeks ago to hire an international consultancy firm to conduct a feasibility study for the printing plant on the state owned daily newspaper, The Ethiopian Herald.
The main aim of planting the factory is to save the foreign currency that the country is spending to print banknotes in foreign countries. The other reason is to centralise the printing of banknotes in one place, according to a senior official from the Bank.
The announcement from the bank requested for consultants to submit their interests of expression so it could explore the possible scenarios for the establishment and the ownership of the factory. It will then conduct a detailed feasibility study if the project is deemed possible. If it is feasible, the consultant will also assist in project implementation up to the commissioning of the printing plant.
The central bank wants the consultant to provide the study in three stages, one to conduct the feasibility study for the printing plant, and if the project is deemed feasible, the other to cover development Request for Proposal (RFP) for supply, installation and commissioning of the factory, including civil works, and the third and final stage includes supervising the project implementation.
The tender was announced on December 2, 2014, and requested bidders to submit their written interest before Friday December 12, 2014. However, the number of bidders who submitted their written interest were not sufficient to conduct the evaluation, so the Bank is going to announce the tender again, according to a bank source. The Bank’s tender procedure demands a minimum of five to seven bidders to carry out the evaluation process of the tender.
The consultant is also expected to analyse the need to establish the banknote factory and define specific types of production machinery for the factory. After determining the feasibly of the project in the technical, economical, financial and environmental aspects, the winning consultant firm will propose the ideal configuration of machines required for production, taking into account future opportunities to integrate with new security futures, according to the tender announced by the Bank.
After the detailed feasibility study, the consultancy firm is expected to prepare the request for the proposal of the procurement, installation and commissioning of all elements of the factory. It will also be part of the evaluation committee to support the Bank in the conclusions of the contracts, set delivery times with suppliers and assist in all phases of the project implementation, up to the final acceptance test and handover.
According to a macroeconomist who is close to the financial sector, the project may cost the government a huge investment, as well as extra costs in human resource. The country does not have a capable human resource specialised in printing banknotes. The macroeconomist also argues that the cost of printing cash out of the country is cheaper than planting the factory, unless the factory prints mobile cards and lottery tickets, in addition to banknotes.
Currently, NBE predominantly prints banknote in European countries, mainly in England and France. It has made an order for new banknote, as the notes that are in circulation have become worn out from use. The old notes will be collected and disposed of by burning.
Officials from the Bank declined to further comment on the issue, stating that the project is in the early stages and so it is difficult to provide statements on the detailed plans of the project.
Recently, NBE ordered all private banks to print their checks at one place in order to centralise the printing of checks, and to avoid check fraud by applying the same security features.
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