Portrait of next top banker
The Public Service Commission (PSC) shortlisted six candidates for todays’s interviews in the race to find the successor for Dr Patrick Njoroge who is set to retire next month.
Dorcas Mutonyi,Haron Sirima,Edward Sambili, Nancy Onyango, Adan Mohamed and Kamau Thugge are seeking to become the governor of the Central Bank of Kenya (CBK). The office holder is also the chairman of the Monetary Policy Committee (MPC), the organ responsible for managing the country’s monetary policy, regulating the banking sector and maintaining financial stability. Appointed by the President with the approval of the National Assembly, the CBK governor serves for a term of four years that can be renewed once.
One of the key challenges the next governor will face is managing inflation, which is the core objective of the apex bank. Based on the “Economic Survey 2023” report, the consumer price index (CPI) data shows that annual inflation rose from 6.1 per cent in 2021 to 7.7 per cent last year. That was mostly caused by the high cost of food and non-alcoholic beverages, transportation, housing, water and electricity, cooking gas and other fuels.
Within the East African Community, inflation surged from 4.4 per cent in 2021 to 6.4 per cent last year as a result of increased energy and food prices. The bank adopted a tight monetary policy stance by hiking the Central Bank Rate (CBR) from 7.00 per cent in December 2021 to 7.50 per cent, 8.25 per cent and 8.75 per cent in June, October and December 2022, respectively. In the last MPC meeting (March 29) the CBR was raised to 9.50 per cent.
Led by central banks
Central banks around the world today have several concerns—including surging inflation, which has resulted in a hike in interest rates. Modern economies tend to be led by central banks, who adjust interest rates with the aim of containing inflation and, often, attaining full employment. However, even though the friction between their objectives of price stability and financial stability doesn’t become apparent soon, there still are trade-offs to be made.
The May 5 CBK weekly bulletin indicated that ,in developed economies, worries about the stability of the banking sector remained high. This is partly due to the fall of three banks—Silicon Valley Bank, Credit Suisse and Signature Bank— in the recent past.
The next governor will need to implement policies that will help to anchor inflation within the target range of 2.5 per cent on either side of the five per cent medium target without stifling economic growth. The CBK governor must, therefore, have superb forecasting skills to have a good sense of direction the economy is going and make appropriate policies. Moreover, they must demonstrate great intellect in risk assessment to lead the enormously important institution on when to step on the brakes hard or gently.
The search for the next governor of the CBK is an opportunity to find a candidate who can address these challenges and build on Dr Njoroge’s feats. Over his eight-year tenure at the helm, CBK implemented cutting-edge policies that have helped to stabilise the financial system, promote financial inclusion and support economic growth. He was also a vocal advocate for fiscal responsibility and transparency in the management of public finances.
The Yale University-trained economist has received many accolades, including the 2018 Central Banker of the Year in Africa by the global UK-based magazine The Banker in honour of his prudence and long-term outlook for Kenya’s economy and banking industry. His successor must, therefore, wield a distinguished track record, leadership skills, experience and ability to manage the complex financial systems of today. BY DAILY NATION
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