The terms of top executives at the Central Bank of Kenya (CBK) are set to expire at around the same time in June, potentially presenting a transition headache for the regulator.
CBK Board Chairman Mohammed Nyaoga, Governor Patrick Njoroge and Deputy Governor Sheila M'Mbijjewe were all appointed on June 19, 2015 for four years. The four-year term will end on June 18, which is just about three weeks away.
Although Ms M'Mbijjewe had been expected to leave in 2018 after attaining 60 years — the mandatory retirement age for public servants, the contract she signed in June 2015 took precedence over age.
It therefore means CBK will definitely have a new deputy governor. Dr Njoroge could have his term renewed as well as Mr Nyaoga.
However, the fact that their contracts are all ending around the same time does not augur well for an institution so crucial in regulating the banking sector.
The CBK has the mandate of formulating and implementing monetary policy “that promotes price stability, fosters liquidity, solvency and stability of the banking sector”, issue currency notes and coins, and provide banking services to the government, commercial banks and other financial institutions.
Meanwhile, five other directors appointed in June 2016 will conclude their terms next year.
The terms of Ms Rachel Dzombo and Mr Samson Cherutich will be ending on December 4, 2020 while those of Mr Ravi Ruparel, Ms Nelius Kariuki and Ms Charity Kisotu will be expiring on November 3, 2020.
Mr Nyaoga acknowledged the situation CBK is staring at, but avoided directly commenting on the consequences of top executives’ terms expiring around the same time or what is being done to mitigate any negative consequences that could come with that.
“The institution is not a personal property. It is a public institution and there are people who have the responsibility of making those decisions. Moreover, I cannot make a decision about myself. In that case then we leave it to the appointing authority and I am sure they are addressing it,” said Mr Nyaoga.
The appointment of the directors whose terms expire next year happened after a delay of almost two years, during which time the board did not have quorum and the governor was left to implement the policies without the backing of a board.
It was during this time the banking sector was shaken to the core following the collapse of three lenders in under a year, namely Dubai Bank in August 2015, Imperial Bank in October 2015 and Chase Bank in April 2016.
While Dr Njoroge looks set for a second term, there has been scrutiny as the governor came in the crosshairs of MPs.
The lawmakers accused him of contempt of parliamentary authority and imposing his own “regulations” on the banking sector, which they claimed had stifled liquidity in the economy.
MPs had threatened to block his reappointment for a second term over his failure to publish the banking regulations, which prescribe customer deposits and withdrawals as provided for in the Banking Act following amendments to the Finance Act in August 2018.
He eventually bowed to pressure from the MPs and agreed to publish the regulations.