The new Central Bank of Kenya governor Kamau Thugge assumed office on June 18 as the 10th governor of the Central Bank of Kenya (CBK). The seasoned economist succeeds Patrick Njoroge after beating out five other candidates.
For Thugge, his appointment crowns an improbable rebound into public service.
In 2019, his career was almost squashed by a corruption scandal in which he and other officials were accused for planning to dupe the government of 55.04 billion Kenyan shillings ($399 million) by entering an arrangement to construct the Arror and Kimwarer dams without proper approval.
His charges were dropped when he became a state witness against his former boss Henry Rotich.
Thugge has taken over at a crucial point in time, as the macroeconomic basics are in crisis and the Kenyan economy is on a descending course.
The shilling currency has depreciated to historical lows, forex reserves are running on empty, inflation remains above the CBK’s 5% target and ballooning public debt has left the government with minimal leeway for interventions.
Thugge brings an exceptional resume and ranks high in a team of economic advisers to President William Ruto. At the Treasury, he held various positions, including principal secretary. Before that, he spent 25 years at the International Monetary Fund, rising to deputy division chief.
Aly Khan Satchu, a Kenyan-based geoeconomic analyst, figures the dams case won’t influence Thugge’s new position. ” In Kenya, a great deal of corruption charges are political,” he notes.
Thugge is a “protected sets of hands” with significant connections at key multilateral establishments, as per Satchu. But he now faces an extreme test and should settle on several critical decisions every step of the way.
Some of these involve the currency. The shilling is considered a managed currency by the IMF; and a bold decision to return it to free currency convertibility is vital.
“The current situation has impaired [Kenya’s] bona fides and capital markets,” Aly Khan Satchu, says.
For the domestic bond market, a mechanism to allow better price discovery is needed to bring back buyers. Currently, most favor short-term maturities.
Meanwhile, Dr. Kamau Thugge has declared that he is worth Sh.450 million. According to him, he owns lands in Ridgeways and Thika Greens, houses in Westlands and Mombasa. Thugge has shares in different markets and cash equivalent.