Politics and policy
Central Bank of Kenya governor Njuguna Ndung’u speaks after the official
opening of the Economic Building at Kenyatta University in Nairobi on
January 30. Photo/FILE
By GEOFFREY IRUNGU, girungu@ke.nationmedia.com
In Summary
- The draft Central Bank of Kenya Bill, 2014 proposes the occupant of the top bank should serve a term of six years.
- Current governor Njuguna Ndung’u is now in his second term of four years having been appointed in 2007 and re-appointed in 2011.
The term of Central Bank governor will cut to a single term from the current two if proposed changes to the law are adopted.
The draft Central Bank of Kenya Bill, 2014
proposes the occupant of the top bank should serve a term of six years
as opposed to the present norm of maximum two terms of four years each.
This will see the governor join the club of state
officials who serve for single terms including the Inspector-General of
Police (four years) as well as the Controller of Budget, the
Auditor-General and the Director of Public Prosecutions who all serve
for maximum eight years.
Current CBK governor Njuguna Ndung’u is now in his
second term of four years having been appointed in 2007 and
re-appointed in 2011.
“The governor shall hold office for a term of six
years, and shall not be eligible for re-appointment,” says the Bill that
proposes competitive hiring of the CBK boss, the deputy governor, the
chairperson and other independent directors.
The appointment of the governor has been the
preserve of President. But the Bill proposes that the President taps CBK
chief executive from three candidates proposed by the bank’s directors
in changes aimed at improving governance at the institution.
The President will put the name before the National Assembly for vetting before the head of state formally appoints the person.
Changes in the hiring of the top banker represent a
departure from when the President’s word carried the day on the
appointment and comes after the governor also lost the power to chair
CBK board with the creation of independent chairperson post.
In 2012, Parliament reviewed the Central Bank Act
separating the chairperson and the governor while expanding the
membership of the board. It was aimed at trimming the powers of the
governor and boost governance.
“The point of the new law is to balance powers
between the governor’s office and the board of directors,” said a CBK
top official who sought anonymity because he is not authorised to speak
for the bank.
“The Bill is intended to bring the law to
international standards such that the board can check any possible
excesses of the governor.”
The chairperson is appointed by the President for a
four-year term renewable only once through a competitive process and
approved by Parliament.
Economist Mbui Wagacha was in September elected as the interim chairman awaiting a formal appointment by the President.
The board of directors of the monetary authority
will have nine members including the chairperson, governor, two deputy
governor, five non-executive members, and the Treasury principal
secretary who will not have a vote
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