Cheap investment cash tops list of what Kenyans want from incoming CBK governor

NAIROBI: After eight years as the governor of Central Bank of Kenya (CBK), Prof Njuguna Ndung’u’s tenure ended earlier this month. While it was during his leadership that the shilling fell to a record low of Sh107 to the dollar, earning him the dubious ranking of Africa’s worst governor, he leaves CBK at a high. Last year, he was named Central Bank Governor of the Year in sub-Saharan Africa for his efforts to lower inflation, strengthen the shilling and improve the penetration of financial services.

CBK’s mandate includes managing the country’s money supply, promoting price stability, issuing currency, advising the Government on fiscal policy and overseeing the commercial banking system. According to the Constitution, “the Central Bank shall not be under the direction or control of any person or authority in the exercise of its powers or performance of its functions”.

CBK has an executive management team, comprising the governor, two deputy governors and heads of department. The governor and his or her deputies are appointed by the President, with the approval of Parliament. They are appointed for a four-year term, but can hold office for one more four-year term.

The Public Service Commission (PSC) last week advertised for the positions of governor, deputy governor and chairperson of CBK. To be considered for the post of the governor, one has to be a Kenyan, have recognised professional standing, a master’s degree in economics, banking, finance or law, and more than 10 years’ experience at a senior management level in these fields.

The process of picking Prof Ndung’u’s successor is expected to take six to eight weeks.

Business Beat sought to find out from a diverse cross-section of Kenyans what their expectations of the new governor are. Excerpts:

Raymer Chebosi, farmer

The incoming governor needs to work on the interest rates that banks charge farmers when they seek access to loans to acquire inputs, particularly machinery. One of the things that are making farming an expensive venture is the high cost of machinery.

Mary Nzyula, university student

I am in my final year at university and I am considering getting a loan to start my own business. But with the high interest rates, it is going to be difficult for me. The incoming governor needs to see to it that banks lower interest rates.

David Wainaina, DJ

Guys in the entertainment industry do not know much about the role of a Central Bank of Kenya governor. So the incoming governor should make people understand his or her role. He or she should also provide guidance on loan rates and make them standard across all the banks to allow us, the SMEs, to access financing.

Jared Onyango, accounting lecturer, Technical University of Kenya

First, is that he or she should be able to manage the foreign exchange rate well so that it does not become very unpredictable because Kenya is basically an importing country. Secondly, the transformation of Kenya into a cashless society, especially through mobile phones, should be prioritised.

Isaac Mwige, United Bank for Africa (UBA) Kenya CEO

Prof Ndung’u was arguably the best governor this market has had. He allowed mobile money entry into the highly regulated banking space, which in turn saw unprecedented growth in the banked population.

He also championed market stability and sustained financial inclusion through the microfinance movement. Many senior banking officials will also confirm that he was accessible and this gave us great comfort and confidence, especially during difficult times in the financial markets. I look forward to a like-minded and driven successor to take us even further.

Adil El Youssefi, Airtel Kenya CEO

Looking at the many benefits that mobile banking has brought to Kenyans, which include access to financial services instantly, we expect the incoming CBK governor to support the mobile money platform as a key sector that will help bank the unbanked in the country. This can be achieved by supporting all the mobile money platforms to be allowed to fairly make their mobile services available to customers. We also expect that the governor will make life easy for Kenyans so that they are able to succeed in all aspects of life.

Scholastica Odhiambo, economics lecturer

The central bank governor should be able to work independently without being influenced by political economists.

For example, right now there is a political call for interest rates to be reduced. While this might sound good to politicians and their voters, it might discourage private investors. So the governor should use his or her discretion on this matter. Personally, with all the agitation for the interest rates to be lowered, I would go for maintenance of the status quo.

Jonathan Ciano, Uchumi Supermarkets CEO

The incoming CBK governor should be in the limelight when it comes to synchronising the national economic plan with such players as the county governments. For example, the money supply policy can go awry when both levels go about asking for money haphazardly. Also, the incoming governor needs to inform Kenyans on how he or she will work within the East African market.

Pradeep Paunrana, Kenya Association of Manufacturers chairman

The traditional role of any central bank is to maintain a good monetary policy — that is, keep inflation under control and create liquidity. The incoming governor must keep a firm grip on these, otherwise people’s livelihoods might be destroyed.

The governor must also deal with the skewed balance of payments that we have.

James Wambugu, UAP Insurance managing director

Prof Ndung’u has done a great job, especially in pumping innovation into the financial services. So, to me, the person that comes in must be one who believes in innovation.

Secondly, the incoming governor must be a person who understands the element of stability in our monetary policy and the discipline that is required. He must not cave in to pressure even when things get tough, as when the shilling traded at Sh107 against the dollar during Ndung’u’s tenure; he remained composed.

Habil Olaka, Kenya Bankers Association CEO

Over the past eight years, the economy made several strides on the back of a progressive policy regime at the CBK. We have seen the bank pursue the stability mandate, both at a macroeconomic level and at the banking sector level.

As a consequence, the financial sector has remained stable amid the global financial meltdown that strained financial markets in emerging and developed markets. My expectations are that the next governor will build on these gains.

The Monetary Policy Committee (MPC) — an important organ of the CBK that is chaired by the governor — has also explicitly championed the need for anchoring inflation expectations around the official target.

Peter Kaluma, Homa Bay MP

Under Prof Ndung’u’s leadership, the banking sector and financial institutions made huge profits by charging transactional fees that even banks in the West do not charge. Also, during his tenure, the banking sector levied high interest charges. This is something the new governor should look into very keenly.

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