The race to succeed Central Bank of Kenya (CBK) Governor Patrick Njoroge has kicked off as the clock ticks towards the end of the economist’s eight-year stint at the helm of the regulator.
The Public Service Commission (PSC) last week kicked off the recruitment process for Dr Njoroge’s successor as well as that of Deputy Governor Sheila M’Mbijjewe.
The race to fill the influential positions comes just two months ahead of Dr Njoroge and Ms M'Mbijjewe’s exits from their respective offices, with their eight-year terms set to end in June.
Dr Njoroge was appointed governor on June 26, 2015 and served for a four-year term before being handed another term by former President Uhuru Kenyatta in June 2019.
The outgoing CBK governor, a former International Monetary Fund adviser, assumed the governor’s office amid a currency slump and inflation risks. As he exits, he leaves behind a mixed legacy.
Dr Njoroge oversaw the introduction of a cap on interest rates through the Banking (Amendment) Act, 2016, which came into force on September 14, 2016. Just two years later, CBK’s own study on the rates cap found they had had an adverse effect on the economy as banks shunned lending to individuals and businesses in favour of lending to the government. The caps were removed in November 2019.
This year, Dr Njoroge has faced challenges propping up Kenya’s foreign reserves.
Kenya’s forex reserves stood at $6.55 billion last week (3.66 months of import cover), which is below the set threshold of import cover of at least four months. When he took over at CBK, the forex reserves stood at $6.788 billion (4.29 months of import cover).
The depletion of the reserves comes due to huge external debt repayment pressures as well as a growing import bill, especially due to high global fuel prices.
Kenya has been battling an acute shortage of dollars that has derailed the importation of key commodities and the settlement of other payments. Despite this, Dr Njoroge has constantly batted away any questions about the shortage.
During his tenure, the introduction of M-Akiba—a retail infrastructure bond that sought to increase participation in government securities—also failed to take off. Piloted in April 2017, the bond allowed a minimum investment of just Sh3,000 with purchases done through mobile phones.
Dr Njoroge will however be remembered for netting some wins, including bringing some stability to the banking sector as well as supporting mergers and acquisitions in the industry to buttress struggling banks.
This includes KCB Bank’s acquisition of National Bank of Kenya (NBK), which has boosted the latter’s fortunes. He also strengthened anti-money laundering checks by pushing banks to strictly enforce compliance with reporting large and suspicious cash transactions. Further, he oversaw the withdrawal of the old Sh1,000 bank notes by October 1,2019 as part of a strategy to beat speculators.
Under his watch, digital credit providers have also been brought under the purview of the CBK, which is currently licensing them as the State cracks down on the previously unregulated lenders who had wreaked havoc in the market by exploiting borrowers.
CBK has so far licensed 32 digital lenders and is processing others after receiving 401 applications.
Dr Njoroge will exit office in circumstances almost similar to when he came in, with inflation having hit a five-year high, the shilling slumping against the US dollar each day, and a biting shortage of dollars crippling operations of importers and large spenders of foreign currency.
His successor will be faced with a tough job especially tackling rising inflation, low forex reserves, ballooning debt, increased domestic borrowing by the government which is squeezing private sector credit and stabilising the macroeconomic environment.
“Pursuant to the provisions of Article 231 of the Constitution of Kenya 2010 and Sections 13-15 of the Central Bank of Kenya Act, Chapter 491, the Public Service Commission hereby invites applications from suitably qualified persons for the positions of Governor and Deputy Governor of the Central Bank of Kenya,” said PSC in a notice.
The commission has set a deadline of April 19 for applicants to submit their applications for the two positions.
Ms M’Mbijjewe has been serving as the lone deputy governor since June 2015. This is after the CBK board failed to renew Haron Sirima’s term after his four-year term ended.
The Central Bank of Kenya Act requires CBK to have two deputy governors who serve for a term of four years, renewable once.
Ms M’Mbijjewe’s successor will serve alongside Dr Koech who was this month appointed by President William Ruto as deputy governor.
