Bad banknotes cost Tanzania dear

Nothing of note on this bill

By Christine Otieno in Dar es Salaam

Tanzania's national bank and the finance ministry are under pressure to explain why millions of bank notes commissioned from a German firm were so expensive and so shoddy.

Nearly a billion notes were ordered from Giesecke and Devrient by bank governor Daudi Ballali, but when the freshly printed wads of cash arrived it was discovered that they were littered with errors.

Bills were printed on one side but blank on the other

The misprints included bills which were printed on one side but blank on the other, and others which were so badly cut that features from two separate notes appeared on a single bill.

The German firm made $49m from the deal with Tanzania, a country where the average annual income is just $260.

Mr Ballali has argued that such mistakes are not uncommon in the banking industry, but his defence has failed to assuage his critics.

Costly cash

Members of the Tanzanian parliament are demanding to know why the German firm, which was already embroiled in a misprint saga with the European Union when it was awarded the commission, was chosen in the first place.

On Thursday night MPs threatened not to pass a budget estimate put forward by Finance Minister Basil Mramba until he gave a satisfactory explanation.

Mr Mramba insisted that all the business arrangements regarding the tender had been above board, but that ultimately the decision to award the commission lay in the hands of the governor.

However according to the 1995 Bank of Tanzania Act, all decisions concerning currency made by the governor are subject to the approval of the finance minister.

The German firm, which has promised to reprint the notes at its own cost, had not made the cheapest offer.

Another firm bid to take on the job for $2m less.

The bank also insisted that bidders agree to use a security feature on the note which is licensed to Giesecke and Devrient, pushing up the price because bidders had to include the fee for using the special security strip in their offer.

Mr Mramba assured parliament that no decision had been taken to renew the contract with Giesecke and Devrient.

But critics says that as long as the notes have to bear the firm's security mark, the German firm will win even if it loses the next tender.