By GEOFFREY IRUNGU, girungu@ke.nationmedia.com
In Summary
- Experts say the one term of six years now provided in the draft Bill could limit effectiveness of the office given that it is a technical position.
Central Bank of Kenya (CBK) governor will be
given two terms of six years each instead of one term if views of a
State team on CBK draft Bill are adopted.
Stakeholders Tuesday were told the one term of six
years now provided in the draft Bill could limit effectiveness of the
office given that it is a technical position.
“It would be prudent to give the governor up to
two terms of six years each so that he can achieve the objectives set
out in the Bill,” said Arthur Namu, a participant at the meeting and the
chair of the State Corporations Advisory Committee at the Office of the
President.
Mr Namu whose team has furnished the Treasury with
the proposals suggested the governor’s performance should be put under
the oversight of the board of directors to ensure that he undertakes his
role in accordance with the CBK Act.
According to John Luusa, chairman of the Institute
of Directors that trains top corporate executives and board members, a
clear separation of the roles of the board and those of the CBK
management will be critical in ensuring best performance of the CBK’s
roles as set out in the law.
“You need to separate the role of the management
from that of the board. The board is the oversight body on the CBK
management and it should be strong and have clear functions,” he said.
Mr Luusa and Mr Namu spoke during the public
deliberations on the Draft CBK Bill (2014) held at the Kenya School of
Monetary Studies in Nairobi.
Mr Namu suggested that the Treasury principal
secretary should be a member of the Monetary Policy Committee (MPC), an
independent agency that sets the benchmark interest rates upon which
several other rates are based.
In the Draft Bill, the members of the MPC are the
governor, two deputy governors as well as the CBK staff member heading
monetary policy docket and another four independent members recruited on
expertise.
“The MPC should report to the board and the
National Assembly as the higher authority. The principal secretary to
the Treasury should also sit on the MPC even if only as an observer,”
said Mr Namu.
Under the draft, the MPC is to be accountable to
the public through making dissemination of information at the national
and county levels which Mr Namu said will now be a reality.
Economist Dickson Khainga said the form in which
the MPC provide minutes of its meetings should be made clear in the Bill
whether it would be verbatim or a summary.
Dr Khainga, who currently heads the macroeconomics
division at the quasi-government Kenya Institute for Public Policy
Research Analysis (Kippra), said the function of finance sector
stability should be a shared responsibility since it stretches beyond
banking into the capital markets and insurance.
“What we need is a clear framework for sharing of
responsibility on the financial sector because some risks are systemic
and not just confined to the banking sector,” said Dr Khainga.
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