Meet the next Central Bank boss

By Steve UMIDHA

The next Central bank (CBK) governor is facing two competing economic trends that could make his or her future rate decisions more difficult and highly treacherous.

On one hand, turmoil in the banking sector including the cost containment and competition from fintechs as well as political quandary over the government’s sustained borrowing splurge, could weaken the economy if banks restrict lending and financial markets tumble on fears of a default on the country’s debt burden.

Such concerns – most of which some economists have repulsed, would call for further rate hikes depending on how the next appointee at the apex bank fiddles with the delicate situation.

On the other hand, the stubborn inflation, while slowing, is persisting at a level far above the central bank’s 2.5 percent target, raising further worries that the next MPC meeting might have to further tighten credit to slow price increases.

It fundamentally means, additional rate hike, if prompted, would follow – a trend that would lead to ever-higher borrowing rates and intensify the risk of a possible economic slump.

The wide range of potential outcomes is what awaits one of the six candidates who have been cherry picked by the government employment agency, the Public Service Commission of Kenya and shortlisted for the position of Governor of the Central Bank of Kenya.

The individual will replace the outgoing Dr. Patrick Njoroge, who has served for eight years and is scheduled to leave office on June 17, 2023.

The commission conducted interviews for the six this week on Tuesday with each allocated a maximum of one hour to plead their case.

The shortlisted contenders included Dorcas Muthoni Mutonyi, Haron Sirima, Edward Sambili, Nancy Onyango, Adan Abdulla Mohamed, and Kamau Thugge, with each candidate having the bragging rights of wealth of experience and expertise in the field of economics and finance.

By virtue of his position at the national treasury as the principal secretary, Dr Thugge – a darling to both previous and current administrations, is one of the sought-after contenders to be the next CBK boss, but faces unbendable competition from other candidates all of whom are serving in high top-level positions.

He has previously worked in the Ministry of Finance as head of Fiscal and Monetary Affairs Department, Economic Secretary and as Senior Economic Advisor.

Before joining the ministry of Finance, he worked with the International Monetary Fund (IMF) as an economist, senior economist and deputy division chief – playing a critical role in swaying the design of Kenya’s current fiscal decentralization system.

He has also coordinated the formulation of legislation for implementing devolution, including the Public Finance Management Act, 2012 and the Commission on Revenue Allocation Act, 2011.

Adan Abdulla Mohammed currently serves as economic Advisor to the President – a close ally of President William Ruto.

Dr Haron Sirima is currently the Director-General of the Public Debt Management Office at the National Treasury and has previously served as the Deputy Central Bank Governor.

While Edward Sambili has also previously served as the Deputy Central Bank Governor, as well as Planning Permanent Secretary is also keen to replace the outgoing CBK governor. Both Dr Haron Sirima and Edward Sambili were also shortlisted for the job in 2015, which was handed to Dr. Njoroge.

Dr Nancy Onyango, is presently serving as the Director of the Office of Internal Audit and Inspection at the International Monetary Fund (IMF) and has over 25 years of experience in internal audit, strategic risk management, corporate governance, and IT risk management under her belt and is highly tipped to be the next CBK boss.

Little is known about Dorcas Muthoni Mutonyi who is also in the race to succeed Dr. Patrick Njoroge who is leaving in June.

Whoever takes over at the CBK’s C-suite office – which is naturally a political appointment, braces for unprecedented challenges and will be expected to also keep the markets calm help cushion against the increasing non-performing loans, political interference and uncertain global financial trends like the impacts of the European war on the economy.

Ordinarily, the bank’s board of directors oversees CBK’s functions by formulating key policies including guidelines that govern the Monetary Policy Committee (MPC). It also reviews the committee’s performance periodically – often every three months.

Other issues such as unsustainable macroeconomic policies (including large current account deficits and unsustainable public debt), excessive credit booms, large capital inflows, and balance sheet fragilities, combined with policy paralysis due to a variety of political and economic constraints, will also be of great concern to the next CBK governor.