It was a meeting that had been long in
coming. Dr. Patrick Njoroge, who took office as the Governor of the Central
Bank of Kenya in the middle of June, has perhaps been the most sought-after of
sources by business journalists, and his stock went up the longer he took to
have a sit-down with reporters and editors. He still has not, as of this
writing, had a one-on-one interview with Kenyan media, so a chance to meet him
in a semi-formal setting was one not to be passed up.
Dr. Njoroge has had such a tumultuous time
since he was nominated by President Kenyatta on the 2nd of June,
that the myth preceded the man long before he walked into a breakfast meeting
with a handful of business editors last week. His personal circumstances have
been relentlessly combed over, especially the revelation that he is quite a bit
of an ascetic, unimpressed by the trappings of high office and preferring to
stick with the tenets of his Opus Dei membership. This particular fact had been
the focus of media attention for a maddeningly long time – especially since he
had come into Kenyan public attention from a two-decade sojourn in the depths
of the IMF in Washington DC and elsewhere.
Dr. Njoroge is coolly amiable in person,
eager to get to know you but still keeping you at a certain reserve. His tenure
at the IMF was obviously not as much in the public limelight as his current
posting, and the occasional thin skin he shows is as a result of the unfinished
process of becoming a closely scrutinised public figure. He gives one the
impression of someone who is still trying to find his sea legs in the middle of
a turbulent wave.
But Dr. Njoroge was quick to make his mark
in what we should have been paying attention to in the first place – his job
and his responsibility. Keep in mind the fact that he had been nominated after
the Central Bank had stayed without a substantive Governor for months, at the
exact time that the Kenya shilling had started tanking against major
currencies. Things were so dire that the Monetary Policy Committee, which sets
interest rates, had raised rates for the first time in years even as Dr.
Njoroge was waiting to be vetted by Parliament. As soon as he stepped into
office, he raised rates again, moving the benchmark Central Bank Rate to where
it currently stands, at 11.5%.
The two policy decisions he has attracted
the most attention for are that action on interest rates – alternately criticised
and praised; and the move to quickly shutter Dubai Bank and Imperial Bank – the
latter which has brought down a ton of second-guessing and recrimination.
The interest rate decisions are a subject
of focus because, even as the shilling stabilised and even gained strength
against the majors, commercial and retail interest rates have seen households
and businesses struggle to make ends meet. It did not help that in September
and October, the government’s finances went haywire, and the interest rates it offered
to buyers of its paper were at levels of a country whose economy was on fire.
The rate rises not only rudely shunted aside the much-vaunted Kenya Bank
Reference Rate, but also started putting a real fear in the growth prospects
for 2015.
Dr. Njoroge is convinced that the CBK’s
interest rate moves were necessary to guarantee growth in the medium term. He
(and his team) was wary of the second-round inflation effects of the declining
shilling (which had not, at the time, percolated into the rest of the economy).
‘We reduced growth’, he says, ‘because instability would have continued’. He
says the Bank is now more warily relaxed about inflation (even as it bumps up
against the 7.5% ceiling), because its causes are visible. He hopes, with good
reason, that the Treasury will rein in spending fairly soon, taking out a huge
cause of inflation and instability.
Dr. Njoroge has acquitted himself adroitly
when it comes to Imperial Bank, many say. He has assuaged the anguish of
smaller depositors whose money was stuck in the bank and who were suffering as
a result, while buying himself time to decide on the fate of the institution
and tie up the untidy loose ends. He has no illusions about the length of time
and difficulty of task, but he is confident that the matter will come to a
judicious end.
He, however, remains extremely angry with
the authors of a list that purported to show a score of other banks in trouble,
and he promises to follow them to the logical, legal end. Significant damage
was done when the list circulated on social media, with smaller banks losing
millions in deposits. He believes that there are far too many self-interested
people seeding the market with self-fulfilling information, and profiting from
the resultant chaos.
Dr. Njoroge is bullish on the Kenyan
economy, saying that Kenya is cushioned against the turmoil experienced in
other African economies, including big ones like South Africa. Our economy is
more diversified and resilient, and we have survived shocks including the
tremor in the Chinese economy in August.
It was a good first meeting, with many
misunderstandings cleared between Dr. Njoroge and we journalists. What remains
is to pester the Central Bank’s communication team for the first, exclusive
sit-down interview.
Also published in the Daily Nation on 8 December 2015
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