The four men who could make or break Ruto governmentWednesday September 28 2022
Four Cabinet Secretary nominees, including former central bank Governor Njuguna Ndung’u, will emerge as the key cogs in the wheel of the new administration that is racing to tackle a heavy debt burden, surging cost of living and drought.
The key nominees for the dockets of Agriculture (Mithika Linturi), Co-operative and SMEs (Simon Chelugui) as well as Energy and Petroleum (Davis Chirchir) will make or break the new President William Ruto administration.
Dr Ruto was sworn into office this month after a hard-fought electoral contest, in which he promised to create economic opportunities for the poor.
But he faces a very narrow fiscal space to implement his policies after the government of his predecessor Uhuru Kenyatta ramped up public borrowing to fund infrastructure projects.
Now, all eyes will, however, be focused on Prof Ndung’u in his role of overseeing Ruto’s key economic pledges, including a plan to invest at least Sh500 billion in agriculture and small businesses over five years.
The former CBK governor will be expected to ease the cost of living, tackle the mounting supplier debt and address the burgeoning public debt -- which is now eating over 60 percent of tax income, up from 12 percent in 2013.
He will have to forge a productive relationship with Mr Linturi, Mr Chirchir and Mr Chelugui in efforts to boost food production, reduce the cost of food, lower fuel and electricity prices and invest in small businesses to help boost job creation through the so-called ‘hustler fund’.
The ‘hustler fund’ will provide State-backed concessional loans to small businesses that have struggled to access financing from mainstream banks.
The Sh250 billion fund will be the centerpiece of President Ruto’s job creation agenda, especially with the outgoing government extending the hiring freeze in parastatals, dashing the hopes of thousands of jobless Kenyans in an economy where companies are shedding jobs.
Mr Chelugui will shepherd the fund. Mr Chirchir will be at the centre of making a decision on fuel subsidies that were
partially scrapped this month in a move that could add to upward pressure on inflation.
President Ruto said subsidies were unsustainable.
Analysts said it was likely the new hikes would push inflation even higher, from a five-year high of 8.5 percent in August.
But Mr Chirchir, a close ally of the President who is making a comeback to the Energy docket, is expected to deliver on cheap fuel and electricity, which hit record prices this month.
"We appreciate that we have a difficult economic situation on our hands," President Ruto said yesterday as he unveiled his Cabinet.
He urged Parliament to swiftly approve his nominees so that the government can start work on the economy.
The nominees will undergo confirmation hearings in the National Assembly, where MPs will vet them and either reject or endorse them before they can be sworn into office.
Dr Ruto also named ex-Finance Minister Musalia Mudavadi as Prime Cabinet Secretary in an overhaul in which only one of former President Kenyatta’s ministers, Mr Chelugui, was retained.
Mr Mudavadi will be the most senior member of Ruto’s administration after the President and Deputy President Rigathi Gachagua.
Of the 22 ministers nominated, seven were women, meeting the constitutional requirement that one gender should not dominate more than two-thirds of State jobs, but fell short of Dr Ruto’s campaign promise to have women account for half of his Cabinet.
Prof Ndung’u was the Central Bank of Kenya governor from 2007 to 2015, before being appointed executive director of the African Economic Research Consortium in 2018. He holds a doctorate in economics from the University of Gothenburg, Sweden.
He won praise for presiding over the expansion of the financial sector but was criticised for prioritising growth over price stability in 2011.
The former governor weathered a political storm in 2012 as Parliament tried to oust him over the currency turmoil the previous year when the shilling weakened sharply and inflation soared.
A Reuters poll ranked him as the worst performing African policymaker after the shilling plunged to its weakest-ever level while inflation soared.
He redeemed his reputation as a central banker in the following years, containing inflation after raising interest rates before gradually stabilising them.
The tenure of the current central bank governor, Patrick Njoroge, is set to end in June next year.
Kenya’s debt increased more than four-fold to Sh8.58 trillion under Dr Ruto’s predecessor, who invested heavily in new rail links and other infrastructure.
The surge in liabilities left the country at high risk of debt distress, according to the International Monetary Fund.
Inflation currently stands at 8.5 percent beyond the State’s upper limit target of 7.5 percent on taxes, low food production and expensive imports while 5.7 percent of Kenya’s labour force was out of work in 2021 -- almost double the East African average.
This underlines Prof Ndung’u’s full in-tray.
Food inflation is currently at 15.3 percent high, with the government hoping to boost production to bring market prices down.
The Ruto Cabinet has rewarded his Rift Valley and Mount Kenya backyard with 55 percent of Cabinet posts or 12 positions, with the latter region where his deputy hails from commanding the lion’s share at seven Cabinet posts.
Western region has three Cabinet slots while Nyanza, Eastern and the Coast regions have two slots each. North Eastern has one position.