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Will Njuguna Ndung'u pull a miracle to rescue Ruto's economy?

Business
  Treasury CS Njuguna Ndung'u. [Elvis Ogina, Standard]

As Cabinet Secretary for the National Treasury, Njuguna Ndung’u’s academic expertise and experience will be vital in navigating Kenya’s economic winds today.

With debt and spending pressures growing, the seasoned professor may hold the key to realising President William Ruto’s touted bottom-up agenda through prudent fiscal stewardship.

An academic from the University of Nairobi and a former Central Bank of Kenya governor, Ndung’u brings a wealth of policy knowledge to the role.

As he unveils the 2024/2025 Budget, all eyes will be on whether his number-crunching can balance competing demands - boosting priority sectors while reining in deficits.

If successful, Ndung’u’s economic blueprint could provide an anchor for Ruto’s transformative plans through inclusive growth.

However, macro-headwinds make the budget challenge complex. Whether the academic don can leverage his financial acumen to steer Kenya to calmer fiscal waters may determine if Ruto’s agenda stays afloat.

A holder of a PhD in Economics from the University of Gothenburg, Sweden, he also served as the executive director of the African Economic Research Consortium and an associate professor at the University of Nairobi.

He is a member of the Brookings Africa Growth Initiative, a member of the Advisory Committee of the Alliance for Financial Inclusion, which coordinates financial inclusion policies in Africa, Asia and Latin America, and a senior advisor for the UNCDF-based Better Than Cash Alliance.

These credentials arguably made President Ruto tap him for the Treasury top job,  which is central to Kenya Kwanza’s Bottom-Up Economic Transformation Agenda (BETA).

Today, Ndung’u will unveil a Sh3.92 trillion Budget, a slight increase from Sh3.9 trillion in 2023/24, with some of the main winners being those that anchor BETA such as agriculture and the digital infrastructure.

However, the CS will be confronted with the herculean task of financing the Budget in the face of the Kenya Revenue Authority to meet its tax targets amid a push to tackle the ballooning public debt by reducing both domestic and international borrowing.

Recently, the National Treasury was forced to cut the proposed 2024/25 budget from an initial Sh4.2 trillion.

Government plans to raise additional revenue by introducing a wide range of taxes have faced fierce opposition from members of the public already reeling from a high cost of living crisis.

The most viable option for Ndung’u, as suggested by the Parliamentary Budget Office, is to foster fiscal responsibility, transparency and efficiency in the utilisation of public finance while supporting inclusive economic growth as outlined in BETA.

This makes him the man on whose shoulders Ruto’s success lies, and he will be called upon to be at his academic best to realise the dream especially as the President heads into the pivotal second financial year of his tenure.

It emerged sometime last year that Ndung’u would be in hot soup if he fails to help the embattled Ruto government address the runaway cost of living by maintaining the inflation rate within the government target range.

This was part of the stringent conditions set by the President for his top money man as the Head of State moved to enhance personal responsibility for his top ministers.

“To ensure macroeconomic stability and growth is maintained, the Cabinet Secretary will: Develop and implement a Macro Economic Framework that fosters; a strong economic growth of 5.5 per cent in 2023,” said part of the performance contract signed by the CS under the watchful eye of President Ruto.

“(He will) collaborate with the Central Bank of Kenya (CBK) to maintain inflation rate at 5.0 per cent +/-2.5 per cent.”

The Ruto administration, which took office in September 2022, has been under pressure to bring down the cost of living and grow jobs.

However, some of its proposed tax and policy measures have been questioned by various interest groups, which has stoked social tensions.

Kenyans face a record hit to living standards as the Ruto Government eyes the implementation of the controversial Finance Bill, 2024, signalling more pain for consumers at a time when inflation has eroded incomes.

The mandate of the National Treasury is to “formulate, implement and monitor prudent economic and financial policies at national and county levels of government.”

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