Former Central Bank of Kenya (CBK) governor Njuguna Ndung’u was paid a Sh22 million gratuity at the end of his second four-year term in March, making his one of the best retirement packages in the public service.
Prof Ndung’u served for two terms before retiring, indicating that he may have left with more than Sh40 million for the two terms he served.
His employment terms did not entitle him to retirement benefits as it was contractual and limited to two four- year terms.
“The amount is specified in the letter of appointment and is paid at the end of the contract period. He served a four- year contract, which was renewed with a new letter of appointment,” said a former executive of the bank.
Kenya’s public and private institutions do not give a breakdown of how they remunerate their executives, making it difficult to compare the governor’s gratuity payout with those of other senior officers who have left service recently.
Prof. Ndungu’s take-home is, however, slightly above the Sh21.6 million lump-sum payment that former Prime Minister Raila Odinga was offered in a Bill the President rejected earlier this year.
Mr Odinga was also set to receive a monthly stipend of Sh960,000 for the rest of his life.
The Bill also entitled former Vice President Kalonzo Musyoka to a Sh19.8 million lump-sum payment and Sh880,000 monthly stipend.
Prof Ndung’u’s time at the helm of the banking sector had mixed outcomes having been named both as the best and worst performing Central Bank governor in Africa during his eight- year tenure.
He was credited with making major contributions to expanding financial inclusion, which has now reached 75 per cent and stands way ahead of other African countries.
Progress mainly came through the launch and exponential growth of Safaricom’s mobile money platform M-Pesa amid opposition from commercial banks, who saw it as amounting to a raid into their market.
Prof Ndungu’s darkest hour came in what was seen as his slow response to the depreciation of the shilling in 2011, which resulted in an interest rate spike.
He also got entangled in a corruption case having been accused of interfering with the procurement process.
The CBK report also showed that the institution paid out Sh950,908 in acting allowances for the month of August this year.
Though the report does not give a breakdown of the allowance payout, the money appears to have been paid to four executive directors who are serving in an acting capacity.
The list includes Teresia Ng’ang’a, human resources, Erastus Miriti, procurement, Paul Wanjagi of currency operations and branch administration, and John Birech in financial markets.
The CBK advertised vacant positions last December in line with PwC’s recommendations, but is yet to fill the positions 10 months later.
The CBK did not respond to our queries on the matter by the time of going to press.
The bank also lacks a substantive board, the term of the previous directors having expired early this year.
The board currently comprises of the chairman, Mohammed Nyaoga, who was appointed in June alongside governor Patrick Njoroge and Treasury secretary Dr Kamau Thugge.
The law requires the board to have five non-executive independent members appointed by the president.
The absence of a substantive board has been a source of concern with the International Monetary Fund stating that “lack of a functioning board poses operational and governance risks for the bank.”
Despite the retirement of the board members before year end, CBK’s remuneration to non-executive directors rose by Sh5 million to Sh20 million which is indicative of a higher pay structure for the board.
The board members are paid a monthly retainer and sitting allowances for each meeting attended.
The remuneration for senior management shrunk to Sh171 million from Sh196 million the previous year.
CBK disclosed the executive management did not take staff loans during the year.
The financial regulator paid a total of Sh48 million in gratuities up from Sh38 million last year.