How CBK boss has ushered in a regime change since taking the reins

Money Markets

 

Central Bank of Kenya Governor Patrick Njoroge. PHOTO | DIANA NGILA |  NATION MEDIA GROUP

By GEOFFREY IRUNGU, girungu@ke.nationmedia.com

In Summary

• Analysts liken Dr Njoroge’s entry and performance to a regime change. They see the regulator as having gained more credibility.
• On monetary issues, the governor now faces the task of keeping interest rates, the banking sector and the shilling stable.

The puzzle about Patrick Njoroge, the Central Bank of Kenya (CBK) governor, began on the day he sat with MPs and revealed that at nearly 53 years old, he was unmarried and owns virtually nothing in Kenya despite a “fat” Sh3 million monthly salary.

Even in their consideration of the amount as an annual pay, the MPs still wondered why the man owned “nothing” at his age, and appeared to favour holding hard currency in banks. But he stressed that his finances were not necessarily going to remain stagnant.

Later on, the puzzle, for some in the banking industry, turned into alarm when it was reported that the man who had been approved by Parliament to take charge of the country’s coffers had declined the trappings of office – a swanky residence in Muthaiga, top-of-the-range vehicles and the latest mobile phones.

It appeared that this would be a difficult man to deal with. If someone is not interested in money and the lifestyle associated with his office, then what does he want?

To address the critics, Dr Njoroge revealed that he was a member of a religious order that eschews a showy lifestyle, practises severe self-discipline and abstains from indulgence.

But time would tell whether he was such a difficult man to deal with, as critics feared.

Having cultivated the image of an ascetic, who lives like a Spartan, the perception that change was rife at the CBK was confirmed after Dr Njoroge took the reins at the financial sector regulator.

And so when Dubai Bank was put under statutory management and soon after quickly considered for liquidation in August, there were whispers that the fears some people had expressed were already being realised.

Matters came to a head when the regulator moved in and again closed Imperial Bank, only weeks after the closure of Dubai Bank. This was even before it become public knowledge that it was the bank’s directors who had approached the regulator with evidence of malpractice and asked him to close it.

The matter has taken a complex turn after some of the parties rushed to court, and any hopes of re-opening the lender as soon as possible – as the governor had envisaged – have been dashed especially after the announcement that depositors had started receiving refunds.

Questions could be asked whether the directors of Imperial Bank would have been so quick to report malpractices in the institution if they believed that the governor would look the other way or ignore the issue if another party to the matter “convinced” him otherwise.

After Dubai Bank was put under statutory management soon after Dr Njoroge took office, that was a not-so-subtle warning that the days were numbered for crooked industry players. It would not be business as usual and action would be taken against those who did not follow the law.

Today, analysts liken Dr Njoroge’s entry and performance to a regime change. They see the regulator as having gained more credibility.

“There has definitely been ‘regime change’ at the Central Bank. I think the governor’s religious mindset gives him outstanding and bullet-proof credibility,” said Aly-Khan Satchu, who runs Nairobi-based financial advisory and data vending firm Rich Management.

However, disentangling the Imperial Bank debacle has taught Dr Njoroge a lesson in the value of not counting the proverbial chicks before the eggs hatch