President Uhuru Kenyatta has appointed Dr Patrick Njoroge for a second and final four-year term as Central Bank of Kenya (CBK) governor. The reappointment effective June 11, 2019 was announced by President Kenyatta through a special gazette notice dated May 24, 2019 issued Thursday morning.
“In exercise of the powers conferred to me by section 13 (2) of the Central Bank of Kenya Act, I Uhuru Kenyatta President and Commander of the Republic of Kenya Defence Forces re-appoint Patrick Ngugi Njoroge to be the governor of the Central Bank of Kenya for a period of four years with effect from the 11th June 2019,” said President Kenyatta.
Dr Njoroge, 58, will now serve until June 2023.
Dr Njoroge was appointed governor on June 26, 2015 and his four-year renewable term was set to end on June 19 this year.
The President also renewed the terms of CBK deputy governor, Sheila M’Mbijjewe and CBK board chairman Mohammed Nyaoga. Dr Njoroge, a former International Monetary Fund adviser, assumed the governor’s office amid a currency slump and inflation risks.
Under his reign, inflation has largely remained under check averaging at 6.2 percent over the period within the government’s target band of 2.5 percent -7.5 percent. The shilling has also remained fairly stable at an average of Sh101.97 to the US dollar over the period. The CBK governor has rejected claims that the Kenyan shilling is over-valued maintaining that its value is only dependent on the forces of demand and supply.
Dr Njoroge’s entry into the top bank spawned the emergence of a new order for financial institutions in Kenya.
Banks have come under heat of enforcement of banking rules under the Yale trained economist’s reign.
Among lenders placed under receivership are Chase Bank (which has since reopened), Imperial Bank that is the subject of a sale transaction with KCB Group, and Dubai Bank that is currently under liquidation.
Under Dr Njoroge’s reign, banks have rationed credit to small businesses with the enactment of a law that limits lending rates to not more than four percentage points above the Central Bank Rate.
The measure in response to the high cost of credit that saw banks lend to private businesses and individuals at more than 20 percent interest has had the effect of stifling the flow of credit market as banks became more cautious in their lending.
Private sector credit grew by 4.9 percent in the 12 months to April, compared to 4.3 percent in March, CBK data shows.
The credit growth remained well below the central bank’s target rate of 12-15 percent, a growth adequate to support economic development.
Recently, the CBK rolled out the long-awaited and controversial printing of new-generation banknotes in line with the law despite criticism from some quarters.