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Debt burden leaves nation too dangerously exposed

By Makau Mutua | May 15th 2016 at 00:00:00 GMT +0300

It’s the job of the Governor of the Central Bank of Kenya Patrick Ngugi Njoroge to know the location of every penny in Kenya. Dr Njoroge regulates all banks and oversees the liquidity of the economy. The CBK formulates monetary policy, promotes price stability, and issues currency. There is no more important institution — and person — in Kenya than the CBK in money matters. The CBK knows when money enters or exits Kenya. The CBK is supposed to know when you launder money. The CBK and its governor can bring down the economy, or a regime. Which begs the question — what does Dr Njoroge know about Eurobond and Kenya’s mounting debt? Is the national economy on the verge of collapse?

I raise these questions not as an indictment of Dr Njoroge. No — Kenya has never had a CBK governor who was more qualified, more ethical, and more unimpeachable. Dr Njoroge towers over all his predecessors combined. He is a moral giant in a sea of ethical dwarfs in Kenya’s political, financial, and economic sectors. Methinks he rues the day he left his cushy job at the IMF to take on the thankless task of policing our economy. That’s because Kenya’s public service is a snake pit — those with clean hands are roadkill, and those with thieving sticky fingers are hallowed. Public thieves regard him as a villain because he foreswears material wealth. Dr Njoroge is a danger to the status quo.

But is Dr Njoroge being allowed to do his job? He’s working without a board of directors. Yes — there’s a chairman of the board, but there are no directors. Lawyer Mohamed Nyaoga, the board’s chair, cannot call a meeting because there’s no quorum. Mr Nyaoga was appointed a year ago to run the more powerful board which sets policy, oversees Dr Njoroge, and helps formulate the CBK’s strategies and financial management. Jubilee’s Uhuru Kenyatta — the country’s CEO — is supposed to appoint five directors to work under Mr Nyaoga. He hasn’t done so a year later, even though the new board is more powerful under the amended CBK Act. The changes to the law made the governor subordinate to the board.

The short of it is that there is a vacuum at the centre of the nation’s economy. Frankly, there couldn’t be a worse time to have a mutilated governance structure at the CBK. That’s because the country is deeply mired in scandal and fraud in virtually every public sector. Cartels of civil servants, politicians, and businesspeople are looting the Treasury dry. Mr Kenyatta himself has acknowledged as much, and pleaded his inability to slay the dragon of corruption. Why then — under such dire circumstances — would Mr Kenyatta allow the CBK to be adrift and rudderless? Why create a ticking time-bomb for the economy? Is the composition of directors a sticking point between TNA and URP? Who’s in charge?

Kenya’s Opposition — and every rational being — have raised a hue and cry over the whereabouts of the nearly $3 billion Eurobond loan raised through international markets. It’s an understatement to say the government hasn’t accounted for the loan. The Jubilee state has alternated from being defensive to outright anger when asked to show us the money. It’s given answers that are at best murky or incomplete, and at worst misleading. Citizens have concluded that someone is either lying, or is acting with impunity. The Opposition recently wrote to the IMF seeking an explanation of the saga. The issue won’t go away. There’s only one way for this to end — the CBK and the Jubilee state must come clean.

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Dr Njoroge has refused to meet Mr Odinga to answer questions about the saga. My free advice to him is to take the opportunity to explain the chain of transactions, and provide proof of the money. Otherwise people think he’s hiding something. He must distance himself from the political class, or be lumped together with them. Dr Njoroge can’t abandon us at the lips of URP’s William Ruto who famously opined that Jubilee can account for every penny. Mr Ruto himself has been mired in several scandals, and so we will have to be forgiven if we don’t take his word as the gospel truth. I know this much — the Eurobond scandal, like Anglo Leasing and Goldenberg, won’t go away.

By itself, the Eurobond saga is bad enough. But pile it on top of other scandals and questionable deals like the SGR project and gazillion Chinese loans the Jubilee state is splurging itself on, and you shudder. Kenya is deeply buried in debt — and teetering on the cliff. Remember Greece? The EU bailed them out, but shrunk their sovereignty. Who will bail Kenya out? That’s why Dr Njoroge needs to assert himself and play a more commanding role.


central bank of kenya (cbk) governor patrick njoroge
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