Eyes on economy as Ndung’u takes over at Treasury

Wednesday, September 28th, 2022 01:45 | By
Former Central Bank of Kenya Governor Prof Njuguna Ndung’u at a past event. Photo/PD/FILE
Prof. Njuguna Ndung’u, National Treasury Cabinet Secretary. PD/file

Former Central Bank of Kenya (CBK) Governor Njuguna Ndung’u has warmed his way back into the Government after being named the next Cabinet Secretary, Treasury and Planning.

Ndung’u, a professor of economics served as CBK Governor for two consecutive four-year terms between March 2007 and March 2015, before quietly exiting the corner office to become the Executive Director of the African Economic Research Consortium (AERC), from where President William Ruto yesterday plucked to replace Ukur Yatani as the new head at the Treasury boss.

Njuguna, who was part of Kenya Kwanza strategy team that assisted President William Ruto ascend to power by crafting his bottom-up economic model, comes to the National Treasury at a time when the cost of living is at an all time high, with inflation having hit 8.5 per cent.

Interestingly, his appointment rekindles a political storm which saw him survive a parliamentary ouster in 2012 over currency turmoil in 2011, when the shilling weakened sharply and inflation soared after a Reuters poll ranked him the worst performing African policymaker.

Interest rates

Ndung’u, however, managed to keep his head high after he contained inflation and interest rates, and the economy will benefit a lot should he once again come out strong in the current economy.

Among the most outstanding issues Ndung’u will face include Kenya’s mounting debt which is estimated at Sh8.6 trillion by June this year. Coming at a time when President William Ruto promised the country will not be in the market for new external debt, it will be a tough balancing act for the new Cabinet Secretary to maintain an upward momentum of the tax revenue which is expected to fund most of the growth.

Ndung’u who is an economist, university professor, and economic researcher is credited with nurturing Kenya’s Fintech sector, with his appointment coinciding with the launch of Safaricom’s M-Pesa, and other mobile money platforms and agency banking that led to a revolution that reduced the cost of doing business as well as contributing to an unprecedented uptake of financial inclusion in the country.

Other appointments the President made yesterday with a direct bearing on the economy include Trade, Investment and Industry under Moses Kuria; East Africa Community which will be headed by Rebecca Miano; Tourism and Wildlife under Penina Malonza as well as Information, Communication and Digital Economy headed by Eliud Owalo.

The Energy and Petroleum ministry will be under a veteran Davis Chirchir, Corporative (Simon Chelugui) and Agriculture and Livestock to be headed by Mithika Linturi.

Kenyans will be keenly watching how Kuria executes his duties at the Trade, Investment and Industry portfolio. He fills the large shoes left by Betty Maina, who has been chaperoning the US-Kenya Free Trade Area (FTA) whose discussions began in April 2020 and are still progressing to attain a middle ground by the two countries.

FTA is expected to replace the Africa Growth and Opportunity (Agoa) Act, which lapses in 2025, expected to define Kenya’s . The FTA is likely to define Kenya’s trade engagement with the US during Ruto’s tenure and in the coming years.

While attending the United Nations General Assembly (UNGA)in New York last week, the President who also had high level business engagements with US investors said he was keen on establishing new relationships and strategic partnerships with the U.S business community to enhance Kenya’s economic and social transformation. Also in the eye of the storm will be Chirchir whom Kenyans expect to stabilise the cost of energy and electricity, two items which are key enablers of economic growth and come up with long lasting solutions to mitigate the recurring drought.

Stabilised prices

Chirchir is taking over the crucial Energy and Petroleum ministry at a time the oil subsidy that has stabilised prices since April last year is due to be removed in a fortnight’s time, with fuel prices expected to shoot through the roof, a factor that will further increase the cost of living. Currently, the products retails at Sh179.3 for Super, while Diesel and Kerosene goes for Sh165 and Sh147.94 per litre respectively.

One would assume that Linturi’s first action will be to contain the drought situation which has placed more than 3.5 million Kenyans, especially from the Northern ARID counties, faced with drought.

However, Limturi must also quickly mull plans to ensure farm inputs such as fertilisers are available and at an affordable cost. He will also be tasked with the challenge of ensuring Kenya moves away from a rain-fed economy to enable irrigation to takes root in the country.

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