Ndung’u had an eventful tenure at the central bank

Njuguna Ndung’u has had the paradoxical honour of being named the best and worst central bank governor in Africa, underscoring his eventful reign at CBK.

In late 2011, a Reuters survey named him the worst central bank governor after the shilling fell precipitously against major currencies, touching a historic low of Sh107 against the dollar that October.

Another media house would fete him three years later, vindication of his role in stabilising the rate of inflation and the exchange rate through painful remedies such as the tripling of the base rate to 18 per cent from six per cent in December 2011.

The Central Bank Kenya (CBK) action managed to bring down the exchange rate and tame inflation, which in turn gave investors confidence to proceed with expansion and capital raising plans.

Faida Investment Bank managing director Bob Karina says macroeconomic stability is a notable area that Prof Ndung’u excelled in.

“Kenya has been one of the most stable markets in Africa. This has enabled most investors to forecast and tell which way to go with their projects,” says FIB Bob Karina.

He said allowing innovation such as M-Pesa is another area where the outgoing central bank governor has done a good job.

Last October Emerging Markets, UK-based financial news agency, named Mr Ndung’u as the Central Bank Governor of the Year, sub-Saharan Africa 2014.

Emerging Markets said at the time that the outgoing governor had managed to achieve stability which is not easy in an economy whose growth is interrupted every election year.

“Maintaining that stability will be crucial in the next few years, as Kenya increases its borrowing in international markets. The country runs a small but significant current account deficit and, in June, issued a $2bn Eurobond. It has also discussed other hard currency bonds, including a yen Samurai bond,” said emerging Africa.

“The political risks to Kenya’s economy remain significant, but the Central Bank has maintained a steady focus on tackling inflation and keeping the currency stable, even during the 2013 elections.”

Other pundits are of the view his performance was expected as a result of strong corporate governance that the CBK has created over the last two decades. “Since the late ‘90s the CBK has become a much respected institution,” said Kestrel Capital chief executive Andre Desimone.

The CBK’s focus on macroeconomic policy, regardless of the regime of the day or who occupies the top seat at the bank, means there will hardly be any change in the bank’s decisions when a new governor comes in according to Mr Desimone.