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Financial sector parastatals in leadership vacuum

The National Social Security Fund building in Nairobi during a past rebranding. FILE PHOTO | NMG
The National Social Security Fund building in Nairobi during a past rebranding. FILE PHOTO | NMG 

A growing number of financial sector State agencies including regulators are running without substantive chief executives in what raises queries on succession planning in the public sector.

The Retirement Benefits Authority is the latest agency to have an acting head after Edward Odundo left office on Thursday, ahead of expiry of his term this week.

Nzomo Mutuku, an RBA insider who was on secondment to the National Treasury, is now acting chief executive of the pension industry regulator pending recruitment of a substantive office holder.

The list of bosses in acting capacity include John Mwaka who has been acting CEO of the Sacco Societies Regulatory Authority (Sasra) since mid-2015, Godfrey Kiptum (Insurance Regulatory Authority), and Mohamud Ahmed Mohamud of the Kenya Deposit Insurance Corporation (KDIC). Also acting is Anthony Omerikwa at the National Social Security Fund (NSSF), an interim position he has held since April 2015.

The Kenya Revenue Authority commissioner-general John Njiraini is also set to hit the retirement age of 60 in December, potentially leaving an acting office holder unless his term is extended or a successor appointed earlier.

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When contacted, Treasury secretary Henry Rotich said he has appointed a CEO at KDIC, but did not give details. He said the IRA board would shortly commence recruitment of a substantive CEO.

NSSF is under Labour secretary Phyllis Kandie while Sasra is under Industrialisation secretary Adan Mohamed.

Prof David Minja, a lecturer at Kenyatta University, reckons that Kenya needs to develop a public sector succession strategy to ensure parastatals are not left in limbo or in a state of anxiety upon exit of their heads.

“We need to streamline the process of succession planning and a framework devoid of political and personal interest. We should develop norms and ethics on succession founded on law, policy and traditions,” said the associate professor of management in the department of public policy and administration.

“State corporations with interim bosses are likely to have demoralised staff and management as they adopt a wait-and-see mentality,” said Prof Minja.

The severity of the leadership gap is underlined by the critical role these agencies play in the economy — and having acting chief executives constrains their ability to deliver on their mandates.

The management vacuum also coincides with a period when these agencies, are in the middle of rolling out key regulatory changes affecting the financial sector.

The IRA, for example, will begin enforcing a new risk-based capital regime in 2018 that will force insurers and reinsurers to match their assets and liabilities.

State-owned deposit underwriter KDIC also plans to implement a risk-based formula in insuring the deposits held by banks and deposit-taking micro-financiers.

This will be a shift from the current flat rate of 0.15 per cent of total deposits held, regardless of lenders’ risk exposure and risk management strategies.

Sasra has already hired a consultant to guide in the setting up of a centralised lending facility for credit unions, akin to the interbank market, as well as establishing a deposit insurance scheme for deposits held in saccos.

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