Njuguna Ndung'u takes final bow after eight years at helm of CBK

Exiting Central Bank of Kenya Governor Njuguna Ndung'u. (Photo:File/Standard)

Njuguna Ndung'u will quietly exit the corner office at Central Bank of Kenya (CBK) Tuesday having outmaneuvered the Ethics and Anti-Corruption Commission (EACC) which wanted him charged over the irregular award of a Sh1.2 billion security system tender.

The professor of economics will be remembered as a boardroom warrior who weathered several storms from Parliament, those he regulated and even in courts through intense behind the scenes lobbying.

From rejecting pressure to reopen Charter-house bank to a recommendation by Parliament to have him sacked over the 2011 free fall of the shilling, Ndung'u will exit holding his head high as having stood by his controversial decisions to the bitter end.

"Some theories we held so dear have been put to the test and they were found to work even better in practice. I leave CBK with a great sense of pride and accomplishment. One important accomplishment for us all is that we have transformed our central banks into strong institutions," Ndung'u told fellow Governors at a meeting in Arusha, Tanzania in one of his last public appearances as CBK boss.

Prof Ndung'u, who has been in office since March 2007, will also be remembered for presiding over a period of growth and stability in the banking sector.

He had just taken over at CBK when Safaricom launched MPesa, a mobile money transfer service that has put Kenya on the global technology map.

It is also during his tenure that CBK allowed more technological experiments within the banking sector leading to the nurturing of other mobile money platforms, agency banking and deepening of banking services in the country.

Fighting inflation

But the man who retires Tuesday has done little to stem the high interest spreads in the banking sector that have seen banks reap billions in interests while paying peanuts to depositors.

Ndung'u has, however, left the country on a strong footing in terms of fighting inflation.

But it is the 2011 free fall of the shilling, the De La Rue printing saga, and the Sh1.2 billion security tender that have stained the eight-year term of one East Africa's most successful governors.

In 2011, the Kenyan shilling hit a record Sh107 against the dollar, its weakest point in 17 years. This saw the governor ranked the worst in Africa at the time. But his fortunes changed when the shilling recovered in 2012.

Ndung'u's tenure also saw British company De La Rue enter into a protracted court battle with a civil rights group for a lucrative tender to print currency for the Government.

It was not until last year that the High Court gave CBK the green light to enter into a contract with De La Rue, after it threw out a petition that was seeking to quash a deal the two parties signed in 2006.

But the most recent nightmare for the governor was the Sh1.2 billion modern security tender. The EACC has accused Prof Ndung'u of delaying the corruption case against him after he sued State agencies for leaking information contained in the corruption report before he was formally charged.

The report suggested that EACC was not happy with the way the case file was moved from one judge to another. Prof Ndung'u sued EACC, the Director of Public Prosecutions, the Inspector General of Police and the Attorney General over the report.

But the DPP argues that the case is an afterthought intended to "delay and procrastinate expeditious finishing of the case challenging Ndung'u's prosecution".

Ndung'u obtained temporary orders barring his arrest, pending the determination of the case.

The DPP had in January issued a directive that Ndung'u be prosecuted for irregularities in the tender award. Ndung'u is accused of directing the award of the tender to Horsebridge Network Systems East Africa Limited against the advice of the tender committee.

A researcher and trainer in various fields of economics, Ndung'u listed the introduction of mobile phone financial services, the agency banking model and currency centres to lower the cost of doing business for banks as part of his initiatives to increase financial inclusion.

Information capital

He said his leadership led to licensing of micro-finance banks, which target lower-income segments, and expanding institutional branch network countrywide, allowing banks to introduce Shariah compliant (or participatory) banking products, and the credit information sharing mechanism to build information capital to solve information problems in the financial sector.

Prior to his appointment as CBK Governor, he was the director of Training at the African Economic Research Consortium. He has lectured at the University of Nairobi, where he earned the title of Associate Professor of Economics.

In recognition of his role in national economic development, President Mwai Kibaki conferred him the Award of First Class of Chief of the Order of the Burning Spear in 2009.

According to a 2013 Geospatial Survey, about 76.7 per cent of Kenyans live within 5km of a financial services touch point compared to 47.3 per cent, 42.7 per cent and 35.1 per cent for Nigeria, Uganda and Tanzania respectively.

Ndung'u also leaves having promoted the existence of what he calls "strong banks". He also credits himself for facilitating the issuance of seven long-term infrastructure bonds by the Government to fund infrastructure projects. At the 18th Ordinary Monetary Affairs Committee Meeting in Arusha, Tanzania last month, Ndung'u summarised his tenure saying "being CBK governor gave me a rare opportunity to conduct monetary policy in practice".

Parliament is preparing to vet his replacement, making it the first time legislators are involved in the appointment of the CBK boss.

An amendment to the CBK ACT in 2012 allowed the President to appoint a governor but "through a transparent and competitive process and with the approval of Parliament". Parliament will only be involved after the name is forwarded to the House through the speaker.