Eyes on Uhuru as CBK governor’s term ends
Monday, May 27, 2019 11:10
By BRIAN NGUGI
The four-year tenures of Central Bank of Kenya (CBK) governor Patrick Njoroge and his deputy, Sheila M’Mbijjewe, are set to end next month, turning the spotlight on the appointing authority, President Uhuru Kenyatta.
Dr Njoroge, 58, was appointed on June 26, 2015 and his four-year renewable term is set to end on June 19.
The governor and deputy governor of CBK are appointed by the President. The governor’s term is renewable only once, in line with the law.
State officials remained mum on the appointment or renewal of the governor’s term, which is critical for policy predictability.
Head of Public Service Joseph Kinyua did not pick our calls nor return messages sent to his phone. Mr Nzioka Waita, the chief of staff at the Office of the President, had also not responded to our queries by the time of going to press. CBK’s head of communications, Wallace Kantai, declined to reveal whether the governor’s term has been extended. “We still have a month to go,” he said.
Dr Njoroge, a former International Monetary Fund adviser, assumed the governor’s office amid a currency slump and inflation risks.
Under his reign, inflation has largely remained under check averaging at 6.2 percent over the period within the government’s target band of 2.5 percent -7.5 percent.
The shilling has also remained fairly stable at an average of Sh101.97 to the US dollar over the period.
Dr Njoroge’s entry into the top bank spawned the emergence of a new order for financial institutions in Kenya.
Banks have come under heat of enforcement of banking rules under the Yale trained economist’s reign.
Among lenders placed under receivership are Chase Bank (which has since reopened), Imperial Bank that is the subject of a sale transaction with KCB Group, and Dubai Bank that is currently under liquidation.
Analysts said sending a clear signal on who the next head of CBK will help to build policy certainty and stability in the financial markets.
“I do believe the market for the Kenya Shilling would be affected. This governor is synonymous with a strong shilling. Uncertainty might make currency traders apprehensive.” said Deepak Dave, a risk management expert with Nairobi-based Riverside Capital Advisory.
Under Dr Njoroge’s reign, banks have rationed credit to small businesses with the enactment of a law that limits lending rates to not more than four percentage points above the Central Bank Rate.
The measure in response to the high cost of credit that saw banks lend to private businesses and individuals at more than 20 percent interest has had the effect of stifling the flow of credit market as banks became more cautious in their lending.
Private sector credit grew just 3.4 percent in the year to February, well below the CBK’S target rate of 12-15 percent that is needed to support economic development.
Last December, CBK launched new coins that have been minted in accordance with the 2010 Constitution, even as it remained tight-lipped on the long-awaited and controversial printing of new-generation banknotes.