CBK board needs professional diversity

cbk (1)
cbk (1)

What you need to know:

  • We need a full CBK board packed with experienced and knowledgeable professionals to guide and steer the bank in areas outside monetary policy such as procurement, human resource management and strategic planning.

There is this theory about pockets of efficiency in the public service. It is the same phenomenon Transparency International addresses when it talks about the idea of islands of integrity in the public sector.

And, that within the public service, there will exist institutions that operate with relatively more efficiency, independence and a higher level of technocracy. Every government that is serious about development strives to nurture and build these technocratic enclaves within the state apparatus instead of stymieing and undermining them.

I want to argue that in taking a long time to fill director positions on the board of the Central Bank of Kenya (CBK), the Treasury has exposed itself as lacking in capacity to support and nurture the pockets of efficiency within its areas of jurisdiction.

Is it not the height of irony and irresponsibility that the positions on a board of an institution so critical to the functioning of the economy have remained vacant for years?

The Auditor-General has raised concerns about the CBK operating with seven directors instead of the required 11. Neither has the regulator filled the position of second deputy governor. Yet according to the law, the CK is supposed to have two deputy governors, one in charge of monetary policy and the other administration and human resources.

We all know how Cabinet Secretaries and powerful individuals within government love the opportunity to appoint and fill vacancies on boards of public institutions as they seek to reward cronies. Why is the board of the CBK treated differently by people in power?

Mark you, this is not the first time for this issue of empty positions on the CBK board has come up. There was a time in 2011 when it stayed without board members for an inordinately long period.

I think the explanation is in history. We must remember that for a long time, during the days of Amos Kimunya as Finance minister the CBK’s board did not have a chairman separate from the governor. In those days, the governor also served as chairman of the bank’s board. Critics charged that this arrangement did not augur well for accountability in the running of this critical national institution.

I must say that I did not support that idea when it was first proposed by Mr Kimunya in 2007. We made a strong case for retaining and upholding the independence and power of the office of the governor of the central bank.

We pontificated that introducing a politically appointed chairman would negatively influence the corporate governance of this body as the political elite would now start treating this technocratic enclave as just another parastatal whose board they could fill with cronies at whim and fancy.

Yet we all agreed that there was a strong case for a corporate governance regime that allows the holding of the top management of the CBK to account especially when it came to decisions that have no bearing on monetary policy — including procurement and strategic planning.

It seems to me that when Kimunya and company were introducing the position of chair of the board, they were not motivated by the introduction of a new corporate governance regime per se but about clipping the powers and influence of the governor in key transactions that were being negotiated at that time, including negotiations for a joint venture with the UK bank note printer, De La Rue International and the privatisation of the former Grand Regency Hotel.

Once these transactions were concluded, interest in filling director positions on the CBK board waned. This situation has not changed to date.

Whether or not the elite take interest in filling director positions on the board of the central bank tends to depend on a specific context. What we need is a full board of the central bank that is packed with experienced and knowledgeable professionals to guide and steer the bank in areas outside monetary policy such as procurement, human resource management and strategic planning.

PAYE Tax Calculator

Note: The results are not exact but very close to the actual.