NAIROBI: The nomination of Patrick N. Njoroge to the position of Central Bank of Kenya Governor is groundbreaking. For the first time, the country is witnessing an open and competitive process where candidates went through rigorous selection and an interview to replace one of the most important person in the economy.
Parliament will vet President Uhuru Kenyatta's nominee after which he can take up the role held previously by Njuguna Ndung'u who retired early this year. Hopefully, his nomination will reassure the money markets in the wake of the shilling's precipitous drop in the last month. Currently is trading at Sh96 to the dollar.
Unlike in the past, CBK now has a powerful board chairman and two deputy governors.
But even as we hope the new structure offers the governor alternative the synergies of a team, there is genuine concern that competitively recruiting a chairman, who does not have security of tenure, has the effect of raising his stature creating concern about turf wars.
The jury is still out. Dr Njoroge has his job cut out. He comes to office at a time of high unemployment despite the country's strengthening economy. It is hoped that Dr Njoroge will take advantage of this and craft policies that are pro-growth. Analysts have been quick to point out Dr Njoroge's chequered history in economic policy including a two-decade stint at the International Monetary Fund, the doyen of global fiscal policy and Kenya's Treasury and Planning ministries as a plus.
In truth, he is head and shoulder above the rest. A PhD graduate of the Ivy League Yale University (where US Federal Reserve chairman Janet Yellen is a former student). Yet despite that, he needs to persuade all that he knows what he is doing, least of all the financial markets. Nothing became of Prof Ndung'u than his stunning remark that there was little he could do as the shilling slipped to levels never seen before in 2011. Then the shilling exchanged at Sh111.
The widening current account deficit should worry him too. It is not hard to know why. An infrastructure-driven economy has seen the country turn to virtually all sources of credit to fund multi-trillion development projects albeit at a cost to the economy.
The country's rising public debt, which climbed from Sh2.36 trillion to Sh2.48 trillion between June and December last year, is expected to push up the cost of credit and cause inflationary pressures in addition to creating a seemingly unsustainable debt burden.
Worryingly, the current account deficit is creeping towards dangerous levels and at 13 per cent, is only second in the world to Mongolia. And what's more, never has the country's economy been more enmeshed with the global economy at any time in history than it is today and some analysts have warned that should a significant global "event" as was witnessed in the 2008 financial crisis play out, Kenya would be more vulnerable than it was seven years ago. The financial industry hopes that Dr Njoroge's mix of global economic policy and insider knowledge on the gears and levers that move the economy will yield policy roadmaps that will get the economic mortar firing on all cylinders.
If Parliament gives the nod - and there seems to be no reason for it not to - Dr Njoroge has his assignment cut out for him. This newspaper wishes him all the best.