David Ndii, President William Ruto’s chief economic adviser, has described Kenya’s stubbornly stable shilling as “witchcraft” while defending the government’s pragmatic approach against International Monetary Fund concerns that the currency’s inertia is distorting inflation targeting.
Speaking at the NCBA Economic Forum last week, Ndii sought to calm anxieties over the shilling’s 14-month hover at around KSh129 to the US dollar. “Relax. It is witchcraft. That is what I can tell you. The stability you see around here is baffling yes, but I can tell you as an economist you have to be pragmatic. And that is what we are doing,” he said.
The remark followed revelations that IMF officials, during a mid-October visit to Nairobi, flagged the exchange rate as “too stable” and potentially interfering with monetary policy transmission.
Kenya Revenue Authority chair Ndiritu Muriithi first disclosed the IMF’s assessment, calling it “strange” and arguing that global models fail to capture local drivers such as $4.2 billion in annual diaspora remittances and foreign reserves at a decade-high of $9.4 billion, covering 4.8 months of imports.
Muriithi later claimed media reports quoted him out of context, but the episode has reignited debate over currency management.
Ndii, chair of the Presidential Council of Economic Advisers, elaborated that the Central Bank of Kenya (CBK) has alternated between interest-rate adjustments and an informal dollar peg to shield consumers from imported inflation in food and fuel.
“Sometimes we use interest rates and sometimes we use the exchange rate, and that’s what I called common sense,” he said, citing Argentina’s fixed-rate stabilisation programme.
The strategy has delivered inflation at a 20-year low of 3.6% and single-digit lending rates, though Treasury secretary John Mbadi cautioned in October that further appreciation would harm exporters and manufacturers.
The calm revives memories of past accusations. In 2022, then-candidate Ruto accused Uhuru Kenyatta’s administration of “playing with economists” to artificially prop up the shilling, which the IMF estimated was overvalued by 17% to 25%.
The US issued manipulation warnings in 2020, and the CBK faced criticism for burning reserves to mask weakness. A post-election market correction saw the currency depreciate sharply, validating earlier concerns.
