Draft Bill proposes single term for the central bank chief

The Central Bank governor will serve a single term from the current two if proposed changes to the law are adopted.

The draft Central Bank of Kenya Bill, 2014 proposes the occupant of the top bank should serve a term of six years as opposed to the present norm of maximum two terms of four years each.

This will see the governor join the club of state officials who serve for single terms including the Inspector-General of Police (four years) as well as the Controller of Budget, the Auditor-General and the Director of Public Prosecutions who all serve for maximum eight years.

Current CBK governor Njuguna Ndung’u is now in his second term of four years having been appointed in 2007 and re-appointed in 2011.

“The governor shall hold office for a term of six years, and shall not be eligible for re-appointment,” says the Bill that proposes competitive hiring of the CBK boss, the deputy governor, the chairperson and other independent directors.

The appointment of the governor has been the preserve of President. But the Bill proposes that the President taps CBK chief executive from three candidates proposed by the bank’s directors in changes aimed at improving governance at the institution.

The President will put the name before the National Assembly for vetting before the head of state formally appoints the person.

Changes in the hiring of the top banker represent a departure from when the President’s word carried the day on the appointment and comes after the governor also lost the power to chair CBK board with the creation of independent chairperson post.

READ: Parliament to get say in hiring central bank governor

In 2012, Parliament reviewed the Central Bank Act separating the chairperson and the governor while expanding the membership of the board. It was aimed at trimming the powers of the governor and boost governance.

“The point of the new law is to balance powers between the governor’s office and the board of directors,” said a CBK top official who sought anonymity because he is not authorised to speak for the bank.

“The Bill is intended to bring the law to international standards such that the board can check any possible excesses of the governor.”

The chairperson is appointed by the President for a four-year term renewable only once through a competitive process and approved by Parliament.

Economist Mbui Wagacha was in September elected as the interim chairman awaiting a formal appointment by the President.

The board of directors of the monetary authority will have nine members including the chairperson, governor, two deputy governor, five non-executive members, and the Treasury principal secretary who will not have a vote.

The non-executive members of the board will be allowed to serve for up to two terms of four years each. They will be competitively sourced by the board before being appointed by President after parliamentary approval.

The changes are in line with the Constitution, which calls for an independent CBK that shall not be under the direction or control of any person or authority.

Recently, Prof Ndung’u sought protection of the courts to avoid arrest and prosecution in a case related to the award of a tender to install security software at the bank. The governor has denied involvement in the case.

The draft says that when a vacancy arises in the offices of the governor, deputy governor, external Monetary Policy Committee member or non-executive directors, the board is supposed to advertise it in the Kenya Gazette and at least two newspapers of national circulation.