Parliament to get say in hiring central bank governor

The President will no longer directly appoint the Central Bank of Kenya governor if fresh amendments to the banking law are adopted.

The President will pick the governor from three candidates proposed by CBK directors in changes aimed at improving governance at the institution.

This is one of the proposals in the review of the Central Bank of Kenya Act, according to a senior CBK executive with knowledge of the changes that will be published in coming weeks.

Changes in the hiring of the top banker is a departure from when the president’s word carried the day on the appointment.

It comes after the governor also lost the power to chair CBK’s board with the creation of an independent chairperson post.

Under the proposals, the board will conduct interviews and forward three names for the president to pick a governor with MPs’ approval. 

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

The appointment of the board, which comprises eight non-executive directors besides the chairperson, governor and principal secretary, is staggered to ensure continuity.

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

Currently, the board is also not fully constituted because it has four non-executive directors. 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.

Njuguna Ndung’u has been governor since 2007. He recently 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.