Kenyan legislators indict Central Bank chief over currency fall
By Mark Oloo in East Africa – Kenya’s Parliament wants the country’s Central Bank governor Njuguna Ndungu to resign to allow for an independent investigation into his conduct.
Central Bank of Kenya Governor Njuguna Ndungu
The indictment follows the governor’s failure to manage the recent sharp decline in the value of the Kenyan currency—the shilling— against the major world currencies.
The fall, witnessed towards the end of last year, at one point hit a record of Sh107 against the US dollar, amid spiralling inflation and unprecedented increase in interest rates.
A committee of Parliament, which probed the shilling woes, handed its report to the House today in which it said Prof Ndungu was solely to blame, citing his lukewarm reaction, which triggered panic and speculation.
The report also indicted the Central Bank of Kenya boss for being responsible for broken down communication between the regulator and commercial banks to the detriment of fiscal policies.
“The governor played down the gravity of the problem to the extent that in various instances and for a, he was quoted saying he would not intervene in the foreign exchange market,” noted the report by the parliamentary select committee chaired by MP Adan Keynan.
The MPs questioned the governor’s competence, saying his behaviour and conduct were not compatible with that required of the holder of the office of Central bank of Kenya governor.
He is also accused of having been economical with truth to Kenyans and Parliament as events leading to the free fall of the shilling began to take shape last year.
The report, at the same time, dismissed claims by Ndungu that external factors had cause the crisis. The legislators said the governor should take full responsibility, adding Kenyans had suffered immensely as a result of the depreciation of the local unit.
The House committee compiled the report after it grilled stakeholders, including officials of commercial banks. When Ndungu appeared before the committee late last year, he defended his actions, shifting blame to external factors.
The governor is yet to respond to the MPs’ recommendation of sanctions against him, even as pressure mounted on him to quit and allow for further investigation. Ndugu, who was handpicked by President Kibaki to head the institution, is serving his second term as governor.
