Kenyan lawmakers confirmed Kamau Thugge’s appointment as governor of the central bank, a key step in an overhaul of the monetary authority’s top leadership.
(Bloomberg) — Kenyan lawmakers confirmed Kamau Thugge’s appointment as governor of the central bank, a key step in an overhaul of the monetary authority’s top leadership.
Thugge, 66, will succeed Patrick Njoroge, whose second four-year term ends on June 17, and chair his first monetary policy committee meeting next month. Deputy Governor Sheila M’Mbijjewe and Chairman Mohammed Nyaoga will conclude their eight-year tenures on the same day and the government is preparing a shortlist of their replacements.
The lawmakers approved President William Ruto’s pick of Thugge for the role during a broadcast session on Wednesday.
The appointment is the latest by Ruto to key institutions that are central to the implementation of his administration’s so-called bottom-up plan, which envisages increased funding for industries including farming and construction to generate jobs and spur economic growth. In September, he appointed former central bank Governor Njuguna Ndung’u as his Treasury secretary.
While the Kenyan central bank’s principal role is to maintain price stability, it’s also mandated to support the government’s economic policies.
At his confirmation hearings, Thugge said his priorities will include fighting inflation, improving bank supervision and encouraging consolidation in the industry, and strengthening micro-finance institutions. In addition, he plans to promote the integration of Kenya’s payments system with an intra-Africa trade platform that’s being championed by the African Export–Import Bank.
Thugge also pledged to consider issuing domestic dollar bonds to boost liquidity in its foreign-exchange market. The plan was faulted by Njoroge, who warned that it risked dollarizing the economy in a country that the International Monetary Fund assesses at high risk of debt distress.
The incoming governor takes over as the central bank struggles to rein in stubborn inflation and a slide in the nation’s currency.
The shilling has slumped 11% against the dollar since the start of the year, ranking it among Africa’s 10 worst-performing currencies this year. The inflation rate has exceeded 7.5%, the upper limit of the central bank’s target for 12 consecutive months.
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The new governor should “be prepared for the bruising times ahead as Kenya faces debt and currency headwinds in light of a profligate government,” said Deepak Dave, an analyst at Toronto-based Riverside Advisory.
Thugge holds a master’s degree and a PhD in economics from Johns Hopkins University. He’s currently a member of Ruto’s council of economic advisers.
He’s worked as a senior economist and deputy division chief at the International Monetary Fund and served as the Kenyan Treasury’s principal secretary from 2013 until 2019, when he was arrested after a probe into alleged irregular payments for a dam-building project. He denied wrongdoing and the public prosecutor withdrew charges against him.
“He is unlikely to radically alter Kenya’s monetary policy path,” although he may be more accommodating of the government’s fiscal needs than Njoroge, who was considered a hawk, said Sebastian Spio-Garbrah, DaMina Advisors’ chief frontier markets analyst. “He is likely to endorse more expansionary quasi-fiscal activities of the Central Bank of Kenya.”
Susan Koech, who took office as deputy governor in March, will be Thugge’s sole assistant at the central bank, pending the recruitment of a second deputy.
Read more: Kenya MPs Back New Central Bank Deputy Before Leadership Change
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