Board changes loom at the Central Bank

Boardroom changes at the CBK have traditionally been marked by long delays as nominees become subject to scrutiny. [Photo: Standard]

The contracts of five non-executive board members expire next year and President Uhuru is expected to fill them to ensure a smooth transition.

The Central Bank of Kenya is likely to get a new board of directors soon as the terms of its top executives come to an end next year.

Auditor-General Edward Ouko has raised the flag over the apex bank’s top management, questioning key decision-making at the financial sector regulator.

In his audit report on the CBK’s operations in the 2017/2018 financial year, the Auditor-General said the bank’s board and management team were improperly constituted, compounding uncertainty around succession plans in the regulators’ boardroom.

“The Central Bank Act Cap 491 of 2014 provides that there shall be eight other non-executive directors of the board,” states Mr Ouko in his audit report. “During the year under review, the bank had in place five non-executive directors transacting business on behalf of the bank.”

The CBK Act requires the board be constituted of 11 members, including the chairperson, the governor, the principal secretary to the Treasury or his representative and eight other non-executive directors.

Vacant slots

In 2016, President Uhuru Kenyatta appointed Nelius Kariuki, Charity Kisotu, Samson Cherutich, Rachel Dzombo, and Ravi Ruparel to the CBK board for a four-year term, leaving three slots vacant.

The CBK laws, however, require that the president appoint directors at different times to avoid the expiry dates of serving executives from coinciding.

With the contracts for all five non-executive board members expiring next year, pressure is mounting on Mr Kenyatta to fill the remaining slots to ensure a smooth transition and continuity of key CBK operations.

However, CBK Deputy Governor Sheila M’Mbijjewe, who was appointed to the position in 2015, is set to retire after attaining the 60-year age requirement for retirement for public servants last year.

 “The CBK Act states there shall be two deputy governors who shall be appointed by the president through a transparent and competitive process and with the approval of Parliament,” stated the audit report. “During the year under review, only one deputy governor was in place.”

In the event of Ms M’Mbijjewe’s retirement, the CBK will have no serving deputy governor. This could compromise operations of key organs at the bank of last resort such as the Monetary Policy Committee.