Central Bank Governor’s position was adjudged the most attractive position after the Presidency in post-independence Kenya.
Reason? The Governor of the lender of the last resort controlled the purse string
As the custodian of monetary policy, inflation control, and foreign exchange controls, this position was critical to inaugural President Jomo Kenyatta.
The holders of this position were close to old Jomo… And had to be feted by the Kiambu mafioso.
Old Jomo was a professional. Though he was driven by patronage, his talent was spotted as a suitable Governor… Certainly among the Kikuyu inner circle.
And so Duncan and Phillip Ndegwa were Central Bank Governors between 1964 and 1989.
CBK, before the liberalization of the economy in 1991 serialized foreign currency, thereby controlling international business
Then and now, CBK supervised banks… Closing those belonging to enemies of the state… While allowing insolvent ones linked to KANU power men to operate.
Trade Bank, Trust Bank, Exchange Bank of Kamlesh Pattni, Euro Bank, Thabiti Finance Bank were among such institutions that operated on state-sponsored whims.
And so by a stroke of the pen, CBK Governor, armed with the Banking Act and impunity of Government Could close or open a bank.
The Ndegwa regime at CBK technically ran the moneybags institute professionally
They ensured that the Kenyan shilling was firm and recognizable in Africa, and held shoulder to shoulder with the dollar, pound.
Runaway graft was unheard of in the Banking world. Fiscal discipline was a way of life.
Banks and financial institutions that faced liquidity challenges were bailed out through credible overnight borrowing.
The flip side of the Ndegwa (and Ndegwa) reign at CBK was that financial services were the preserve of the rich, the wild and magendo traders
Governor Ndegwas have unfairly been accused of assisting traders from Central Kenya blossom, facilitating cheap credit to them using state banks.
Exit Ndegwa. Enter Eric Kotut. Kotut is synonymous with Goldenberg. And Goldenberg with Kotut.
It was during his reign that inflation rose to the highest level… Specifically in 1993.
Kotut was accused of increasing the money supply to chase non-existent goods(inflation).
It would appear Kotut was noting print orders from Cyrus Jirongo to fund YK 92 activities…
By the time he exited, Exchange Bank, Pattni, and Kanyotu had stolen Sh. 5.8billion from CBK
Of course, Pattni has been cleared of any wrongdoing by the justice system. But the mess he created haunts the economy to this day.
Kotut was sacked by Moi to save face for the economic mess the bank found itself in
The call to sack him was made in 1993…after Moi was safely in State House….
Exit Kotut. Enter the staunch and strict Opus Dei Roman Catholic adherent Micah Cheserem. Cheserem walked into the chaos, inflation stealing and impunity at CBK. With the backing of Bretton Woods institutions, Cheserem purchased truckloads of brooms and detergent to clear the mess.
It was during his reign that CBK build institutional capacity to police a tattered struggling and decaying banking sector.
Moi had realized that to leave whatever legacy, a thriving CBK was necessary.
Cheserem, unlike Kotut, was a decorated accountant, educated at Strathmore College and working for Unilever..
He was a revered accountant in the region. And he was a Kalenjin, with a godfather known as Joshua Kulei.
Although he was remotely related to power man Biwott(a Keiyo), he adhered to Catholic Church tenets of honesty. But not chastity.
And so he managed to stead the CBK ship back to calm shores. Fiscal discipline et al.
Cheserem however managed to ensure that Rift Valley residents were the majority employees at CBK. But those he hired were qualified.
When Moi was elected for his second and final term in 1997, Cheserem became a dead man walking.
Moi wanted to tidy up his mess so that he’s not accused of too many ills come his retirement
The influence of Kotut was also waning as Gideon Moi had come of age and was bullish about his father’s empire.
And so Cheserem was sacked in broad daylight vide a KBC lunchtime bulletin.
Cheserem was replaced by Nahashon Ngige Nyaga, a man he had jettisoned from CBK to Retirement Benefits Authority, (RBA).
Nyaga is currently(2023) a full-time real estate broker and agent for Tatu City.
He holds the dubious distinction of being the shortest-serving CBK Governor(1999 to 2003).
Nyaga, the son of Former Cabinet Minister Jeremiah Nyaga is remembered for cheering on as Euro Bank swallowed Government deposits
During his time, Euro Bank, a tiny bank was the preferred investment destination for parastatals and other Government agencies.
The reason for this pedestrian stance by the CBK is not hard to guess. But it has nothing to do with religion.
Euro Bank was allowed to continue operating well below liquidity levels.
Again, on Nyaga’s instruction, based on a stupid notion of supporting local institutions
Moi and the Nyaga family were close. There was no doubting the fact that the Governor’s brief was to launder certain transactions on behalf of officialdom.
By this time, the Anti-Money Laundering Law had not been enacted. And so there was no offence going by that name
Nyaga and the KRA Commissioner General were sacked over the Euro Bank saga in 2003. On instigation of Governor Charity Kaluki Ngilu.
Ngilu had a motive. To push for the employment of her cousin Dr Andrew Kavulya Mullei.
Mullei joined CBK at a time when the bank capacity was steel strong.
He was a colourless, almost ignominious operator. He attempted to fight. Cartels in the Banking sector over the cost of credit…
In the process, the cartels profiled him and started working for his career demise.
His rigidity didn’t help much. He lost the political will of his Kamba community when he closed Daima Bank.
He is the first sitting Governor of the Central Bank to be arrested by his own banking fraud squad…
And so Mullei left the same way he had arrived at the CBK. Through the back door
Analysts however blame the sacking of Mullei to the Kiambu mafia who wanted one of their own at CBK. And it came to pass.
Exit Mullei. Enter Professor Njuguna Ndung’u aka economic shocks.
Ndung’u was the Governor during the Post Election violence regime… One of the lowest moments for the economy and politics of Kenya.
He had to midwife the economic shocks characterized by the fight between Raila Odinga and Mwai Kibaki after the 2007 election dispute
Ndung’u, a virgin author scholar, and economist had incidentally written a book on ethnic strife effects on the economy ten years to the violence.
It was Co-authored with Professor Kaimenyi, a former CS Education. Ndung’u had some excellent rapport with donors which he retains to date.
Now he is the CS for National Treasury. Familiar ground… But the same 14th-floor office nearly cost him his job as Governor when Uhuru Kenyatta was in charge of Finance.
Ndung’u’s biggest challenge was the sale (auction) of the Grand Regency to Libya
The hotel was sold for Sh2.95 billion after valuation by Lyod Masika.
The matter moved to Parliament and consumed Amos Kimunya, then Finance Minister
Senator Bonny Khalwalwe was the architect of the Kimunya and Ndung’u onslaught.
He survived the Grand Regency sale. But he had to permanently seek an injunction to complete his term as the Governor of CBK. The jury is still out there on how he performed at CBK.
To his credit, Ndung’u introduced the CBR instrument that stabilized lending and gave it a scientific approach.
He is a former classmate of Mutahi Ngunyi and Musalia Mudavadi at the University of Nairobi.
