Central Bank of Kenya Governor Patrick Njoroge now claims his institution is under attack from anonymous sources who want to tie its hands on enforcing regulations.
In a statement that could put him at loggerheads with the National Treasury, the CBK boss described the recent proposals in the Financial Markets Conduct Bill 2018 as ones that took regulation “backward substantially”.
While Treasury says the law is meant to promote a fair, non-discriminatory market place for access to credit and provide uniform practices, Dr Njoroge feels that the bottom line of the proposals is to make CBK a toothless dog.
“In sum, this is financial sector equivalent of being asked to trade in your well-serviced SUV for a souped-up Subaru. It may have flashy lights, stabiliser at the back, noisy exhaust and racing strength but it is still a Subaru,” he said.
“It is time for action. Make no mistakes, CBK is under attack. These are summons to act with courage to defend and strengthen it, reviving our hope in the common vision of a modern CBK at the heart of a vibrant financial system.”
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Addressing the press at CBK headquarters yesterday, Njoroge said the bill contained nothing to sustainably address the concerns that led to the introduction of rate caps.
This is the second time that the governor has claimed that his powers are being clipped. He has already said the interest rate cap in itself denied CBK’s Monetary Policy Committee powers to freely transmit polices to the market.
Even though Njoroge did not name any forces behind the alleged attacks to weaken CBK, he said “certain parties” were ready to play mischief in the economy - but that he was ready and unafraid.
“I have been warned about certain parties that lie in wait, poised for mischief, and that our actions have consequences. After all this is Kenya. We are ready for that,” he said.
Wrong direction
The proposals are a step in the wrong direction, he added, and would only serve to make the Banking Act play second fiddle to the Financial Markets Conduct Bill.
“This is something we have a lot of trouble with... the Bill emasculates CBK. It strips CBK of powers to enforce the caps, and indeed other things as well,” said the governor.
“Here you are as a regulator and you cannot control reckless lending. Then why are you in power? Why are you working as a regulator?” he posed.
