New CBK board to push for more banking reforms

Chairman Nyaoga says team will put in place effective policy framework to achieve its mandate.

Central Bank of Kenya board chairman Mohammed Nyaoga during veting in Parliament on June 16, 2015. PHOTO | SALATON NJAU | NATION MEDIA GROUP 

In Summary

• Treasury said it had finalised picking names of CBK board of directors and expects them to be appointed soon.
• The term of the board ended last year but only chairman Nyaoga has been appointed.
• Treasury CS Rotich said nominees names would be forwarded to the President who would in turn appoint them before seeking approval from Parliament.

By BRIAN NGUGI
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The incoming board of the Central Bank of Kenya (CBK) will push for more reforms and sound policies in the banking sector, chairman Mohammed Nyaoga has said.

He said the panel, when fully constituted will in line with its legal mandate, put in place structures, systems and procedures that will enable the regulator to deliver more effectively on its roles.

“The role of the CBK board is clearly codified under the Central Bank of Kenya Act. It is predicated upon best corporate governance practices globally. Good governance is not only important for CBK as an institution, but it is crucial for the entire banking industry,” Mr Nyaoga told the Nation.

Mid last month, Treasury said it had finalised picking names of CBK board of directors and expects them to be appointed soon.

The term of the board ended last year but only chairman Nyaoga has been appointed.

Mr Nyaoga said the new team would back efforts by CBK Governor Patrick Njoroge in cleaning up the banking sector.

“We will fully support the governor in his efforts to clean the banking industry because this has been part of the objectives of the bank and it is in broad public interest. We are in era where we have increased level of public scrutiny and accountability. We have policies, processes and procedures backed by the relevant structures and systems currently that of course will require strengthening and review to keep in line with requirements of the moment and this I see as the requirement of the new board,” he said.

Treasury Cabinet Secretary Henry Rotich said nominees names would be forwarded to the President who would in turn appoint them before seeking approval from Parliament.

He said absence of a board did not mean that the financial sector was under threat since the governor was charged with ensuring risks are minimised.

“The fact that there is no board does not pose any threat to the sector. The board is only for making policy. The CBK management is fully in charge. What has happened so far isn’t systemic,” said Mr Rotich.

OVERSIGHT ROLE

He said the financial sector had become complex in the last three decades prompting the need to improve supervision, especially in view of banks’ regional expansion.

Questions have been raised in the past as to whether having a board would not seriously compromise the independence of the office of the governor.

Mr Nyaoga, however, said the CBK board would only provide oversight in line with its mandate.

“The incoming board will not micro manage the bank. We shall keep away from day to day raw issues of CBK because if we do so we will be stepping outside our mandate. It would also cause confusion and a governance challenge within the institution. It would be crucial to have an elaborate induction programme for the new members,” he said.

Under the Central Bank of Kenya Act (Cap. 491), the responsibility for determining the policy of the bank, other than the formulation of monetary policy, is given to the board of directors.