Ratio Magazine :: The Inside Track to East Africa’s Economies - Kenya: Commentary: Central Banker to the Desert : Not a Visionary Move

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Kenya: Commentary: Central Banker to the Desert : Not a Visionary Move

Thursday, 18 September 2008

Central Bank of Kenya (CBK) Deputy Governor Jacinta Mwatela was literally sent off to the desert after three decades at the Bank

That Mr Ole Ntimama, Minister for National Heritage, would appoint his sister to the board of Kenya’s National Museum is perhaps par for the course. That Prime Minister Raila Odinga reportedly put forward his sisters for diplomatic and ambassadorial positions is perhaps not surprising either. Of course it would be desirable if positions in the public sector were filled with people chosen in a competitive process and based on merit, but realistically, everyone expects MPs and ministers to sort out their car loans first, ponder how their spouses can be made eligible for a salary on the basis of being, well, a spouse, and then move on swiftly to try and employ everyone and their pet fish from their wider family.

Perhaps because such behaviour is generally expected, there was no great outcry that Minister for Transport, Ali Chirau Mwakwere, had hired his brother to the Transport Licensing Board, despite an absence of obvious qualifications for the job. It’s just what happens. Many people are resigned about this, and much of the public debate is not, in fact, focused on qualifications for jobs, but on entitlements and ‘rewards’ for ‘certain communities’.

But while the board of the National Museum of Kenya is unlikely to affect the wider economy, it is an entirely different matter as far as appointments in key economic institutions like the Central Bank of Kenya (CBK) go. Deputy Governor Jacinta Mwatela ran the CBK in an acting capacity after previous governor Andrew Mullei had been suspended on, as it turns out, unfounded corruption charges, and before current governor Njuguna Ndung’u was appointed. Now, with Kibaki ordering her transfer to the position of permanent secretary (PS) in the Ministry of Development of Northern Kenya and Arid Areas, one of the ministries created for the many demands of the Grand Coalition, she has figuratively and literally been sent to the desert – a move that she refused.

Unsurprisingly, there is much discontent with this decision in the banking industry. ‘Strange’ is one of the politer adjectives that industry professionals find for Kibaki’s decision. If at all required, a transfer to the Ministry of Finance would have been sensible. But bankers are reluctant to speak out publicly, given the sensitive nature of this issue. Disappointingly, however, the Executive Director of the Kenya Bankers Association (KBA), Mr John Wanyela, hastily backed down before the government could even as much as throw a sharp glance in his direction: ‘Those really are government issues and I do not have a comment on the transfer.’

In the industry, Mwatela is widely appreciated as an experienced, reliable and, above all, honest professional – an important point for an institution that has been implicated in Kenya’s legendary Goldenberg Scam, and whose governor, Njuguna Ndungu, is still under investigation in the disputed sale of the Grand Regency Hotel. Mwatela alleges that her transfer was due to her opposition to corrupt deals with currency printer De La Rue. Incidentally, when parliament pushed for Finance Minister Kimunya’s suspension, he had been accused of improper involvement in both De La Rue and the Grand Regency sale.

All this background noise of corruption means that Kenya’s government is yet again missing an opportunity to achieve some real progress. Kimunya had rightly proposed an increase in the minimum capital for banks to encourage consolidation and stronger institutions. Nigeria’s example shows that this is possible, and that it helps a country become a serious actor in international markets. But it requires strong and very focused leadership. Mwatela’s transfer and her replacement show where the priorities of the Kenyan government lie.

In Nairobi, initiatives for reforms to improve the business environment are currently proliferating like fruit flies: The Prime Minister’s round table and delivery unit, the Ministry for Nairobi Metropolitan, Vision 2030. But as much as the private sector had been cautiously positive on the Prime Minister’s efforts to engage them, the Mwatela transfer clarifies one thing: Political expediency over merit and, worse still, protecting seemingly yet another dodgy deal over strengthening one of the key macroeconomic institutions in the country. This was no different in the odd process in which a marketing and public relations ‘consultant’ had suddenly, and without regard to due process, been put in charge of the National Social Security Fund (NSSF). New appointments to the National Economic and Social Council (Kenya: 11 September 2008: President Kibaki Announces Appointments to National Economic and Social Council (NESC)) included Kibaki buddy Jimnah Mbaru, but no trace of the key industry associations like the Kenya Private Sector Alliance (KEPSA) or the Kenya Association of Manufacturers (KAM). As if hallucinating, everyone talks about visions and dreams – and then proceeds to appoint underqualified and even tainted people with impressive clarity.

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