What next for lenders, as Central bank boss gets nod for a second term

By Steve Umidha

It was bound to happen, wasn’t it? That President Uhuru Kenyatta would reappoint Patrick Ngugi Njoroge for a second term as governor of the east African nation’s central bank.

Njoroge, a 58 year old Kenyan economist and seasoned banker had been at the helm of the regulatory institution for the last four years before his endorsement for a second and final 4-year term in office.

As he steps into his next freehold, the soft-spoken man with the traits of a monk, and who doesn’t seem to covet earthly wealth and opulence is being entrusted, again to steady the ‘ship’ that is Kenyan’s financial sector amid signs of new asset bubbles, and a big question is whether the steps he took before after the crisis that witnessed the closure of some banks and mergers of others, have made that system strong enough to withstand the next shock.

While banks are safer now on many counts than before the crisis, the economic and political repercussions are still being felt, not only by borrowers but also banks themselves. Leverage has shifted to companies from consumers, and some risk has migrated to shadow banks from traditional lenders. Links between shadow and mainstream banks persist, and taxpayer bailouts, though less likely, are still possible.

Read more on our June-July 2019 print edition