President Uhuru Kenyatta appoints Patrick Njoroge new CBK governor

Dr Patrick Njoroge

NAIROBI: President Uhuru Kenyatta has formally appointed Dr Patrick Njoroge as the ninth boss at the Central Bank of Kenya (CBK), as the public purse holder institution enters into a new era.

CBK Friday posted that the President had made the appointment effective June 19. Njoroge takes up the job, after quitting as a senior adviser at the International Monetary Fund, at a time when the Kenyan currency is at its lowest in nearly four years against the US dollar.

“His Excellency the President has appointed Mr Jairus Mohammed Nyaoga as the Chairman of the Central Bank of Kenya Board of Directors, Dr Patrick Njoroge as the Governor and Ms Sheila M’Mbijjiwe as the second Deputy Governor,” a brief statement from CBK said in part. “Their four year term of office is effective from June 19, 2015.”

It is the first time that the CBK has two deputy governors and a powerful chairman. Top officials of the CBK are allowed to serve an additional four-year term, but the renewal is pegged to their performance. In 2011 however, former President Mwai Kibaki renewed the then governor’s term even after he was ranked the worst performing in Africa following his inability to stem the free fall of the Kenya Shilling, which at one time slid to historical lows of Sh107 against the US dollar. Njoroge’s appointment came a day after MPs approved, albeit with a disclaimer, Njoroge for the position that fell vacant in March when Prof Njuguna Ndung’u retired. “The nominee (Dr Njoroge) was open-minded, independent and exhibited impressive knowledge of topical issues touching on monetary policy and has the requisite abilities, qualifications and experience to serve as the governor of the Central Bank of Kenya,” the MPs said in their approval, before throwing in the cautious rider.

“However, he may not be conversant with the Kenyan working environment considering that he has been working abroad for almost his entire life. He will therefore need to create a working rapport with his team and stakeholders to help him govern.”

Njoroge had responded to the MPs concerns saying he was a team player who would widely consult with his colleagues on issues he may not be well conversant with. Njoroge beat five candidates to the post who had been shortlisted by the Public Service Commission. Current CBK Deputy Governor Haron Sirima was among the finalists for the job, alongside former CBK Deputy Governor Edward Sambili, the Economic Affairs Director at Treasury Geoffrey Mwau and Dr Peninah Wanjira Kariuki.

UPPER ECHELON

“What we need is confidence in order to stabilise the Kenya Shilling exchange rate against the US dollar. This is one of the issues that i will have to grapple with in my new role at the CBK,” M’Mbijjiwe told Weekend Business in an interview. At the end of vetting by parliament, Majority Leader Aden Duale said the three should address inflation and the fall of the shilling. He said the country should avoid attracting sanctions from the IMF and the World Bank over failure to tame fall of the local currency.

Also under close watch during the new team’s entry into CBK is how it handles the issue of increased minimum core capital for commercial banks, as spelt out in the 2015/16 budget. Already CBK mandarins appear not to be reading from the same script as Treasury on this issue. “We cannot focus only on creating bigger banks that will serve the upper echelon alone. What we need to ask ourselves is whether indeed there are too many banks and that we have the right vehicle to serve the lower end credit market,” said M’Mbijjiwe.

The new CBK rules require banks to hike their minimum capital from the current Sh1 billion to Sh5 billion by June 2018. “With regards to the proposed minimum capital levels, smaller banks, especially those with capital below Sh2 billion, there will be a need to consider mergers and acquisitions given the wide capital gap which they may be unable to close by 2018,” said Faith Waitherero Mwangi, an analyst at Standard Investment Bank (SIB).

“The other option is for smaller banks to retain profits, raise new capital from shareholders, acquire or merging with other banks. I think it would be improbable that large tier one banks will acquire the small banks and I would expect small banks to merge with each other where synergies can be realized,” said Waitherero.

Business
Premium Burdened Kenyans walk into Easter weekend broke
By Brian Ngugi 25 mins ago
Business
Premium Looming crisis as top lenders stare at Sh500b in bad loans
Business
Premium Water PS Korir put on the spot over Sh14m dam land
Business
Premium Ruto's food security hopes facing storm amid fake fertiliser scam