Bankers oppose more powers for MPs as real estate investors welcome housing fund plan

Unnecessary burden

“We would not support the creation of a Chairman’s post at CBK.  It is an unnecessary burden on the taxpayer for undefined value.” Mr Wanyela said.

The draft constitution also sets the criteria by which someone will be appointed governor.

Previously the president could pick virtually anyone – even with mere accounting experience – to head the institution but the draft law now requires that the person be schooled in economics, finance or accounting.

The definition of the role of the CBK is a bit more extensive and ambitious but, glaringly, leaves out the price stability function previously expressly stated in the CBK Act.

Mr Nkungi said that the drafters did not have the necessary skills to understand the meaning of managing inflation.

“Actually the Central Bank of Kenya should have contributed to the review of this section of the constitution. The public need to have confidence with the Central Bank of Kenya as a financial industry is easily affected by very simple changes and comments,” he said.

The draft says that the bank shall promote and maintain the stability of the value of the currency of the Republic, issue notes and coins, act as banker and financial adviser of the Government, conduct the monetary policy of the Government in a manner consistent with the relevant provisions of the law in the interest of the balanced and sustainable economic growth of the Republic.

It also – quite controversially perhaps – states that the CBK shall “encourage and promote economic development and the efficient utilisation of the resources of the Republic, through effective and efficient operation of a banking and credit system.”

For one, “economic development” might call for clarification as opposed to the clearer parameter of economic growth expressed in form of gross domestic or national product. And the relationship between this role and that of the ministries of finance and national planning – that more specifically handle the development function – may have to be outlined.

The current CBK Act says that “the principal object of the Bank shall be to formulate and implement monetary policy directed to achieving and maintaining stability in the general level of prices.”

The simple meaning of this is that the CBK should be concerned with inflation since it is the key gauge of the movement of prices.

Some countries even set an inflation target as a way of ensuring that the central bank deviates very little, if at all, from it thereby keeping prices fairly stable in the economy.

Since independence successive presidents have always had their pictures grace the coins or notes although in the Kibaki regime only the commemorative Sh40 coin has his portrait.

Portrait of individual