Central Bank of Kenya (CBK) Governor Dr Patrick Njoroge has said his one year at the helm of the regulator has been tough and challenging. In an exclusive interview with the People Daily, the governor recounted how his tenure in office has been difficult owing to challenges he had to deal with to ensure the banking sector maintained its stature and stability.
The soft-spoken Njoroge says rising inflation, interest rates and a troubled financial sector in which three banks were put on receivership in quick succession comprised serious challenges. “It has been challenging since I took over and each day has been different. We have covered the entire gamut of issues CBK is supposed to deal with,” soft-spoken Njoroge told People Daily.
The governor said last year was more of a stabilisation period for CBK while this year is more of a transitional period for the regulator. But despite the challenges the governor is exuding confidence that the macro-environment has stabilised and things would only get better.
Others who marked one year in office with the governor are his deputy, Sheila M’Mbijjewe and board chairman Mohammed Nyaoga who were appointed to serve a four-year term, with the possibility for another term based on performance. “When we came in June we dealt with high inflation, exchange rates and interest rates. It was a cocktail of issues and there was no time to pause,” he said.
“I am an economist and these are things I have been doing for many years. Although 2015 was challenging, it ended well with all the macro-issues well addressed,” he added. Njoroge, who joined CBK from the International Monetary Fund (IMF), where he was serving as an adviser, took over at a time the shilling was at its lowest against the dollar in four years.
His biggest test came in August when Dubai Bank experienced liquidity problems and capital deficiency, which forced the CBK to place it under receivership. Two months later, CBK also put Imperial Bank under statutory management after learning that “unsafe and unsound business conditions to transact business” existed in the bank. Six months later, the same axe fell on Chase Bank.
The expeditious manner in which these banks were put under statutory management did not go down well with some industry players who thought CBK was a bit hasty. But Njoroge says something had to be done to save the depositors’ funds. “Our responsibility is first with the depositors. That is why we took those decisions. But more importantly, we have learnt a lot.
One of the biggest lessons is the maturity and selfless nature of our commercial banks. “For instance, in December when Kenya Commercial Bank and Diamond Trust Bank were asked to pay Imperial Bank depositors, they did so selflessly with not financial benefit on their part. They did it for the stability in the banking sector and social good.”
While his one year in office has been eventful, the governor has taken time to reflect on what transpired during his vetting process by Members of Parliament. What puzzled most, even the vetting committee, was when he revealed that he has neither property in Kenya nor a wife at the age of 54. Looking back, the Yale-educated economist says he was not fazed by those questions.
“I know these are the things that captured the minds of people…my private life and such things. These are irritants you know, but people ask questions and you answer and move on,” he said. Does he remember anything interesting from the vetting process a year ago?
“Yes, the one thing I thought was interesting was the difference of views between me the members of the vetting committee on where we thought CBK was headed. I have my vision and the MPs had theirs. But looking back I can say none of us was right!”
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