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Kenya: Who is Kamau Thugge, Ruto’s nominee for Central Bank governor?

By Son Gatitu

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Posted on May 16, 2023 13:16

 © Kamau Thugge, Kenya’s Central Bank governor nominee (credit: rights reserved)
Kamau Thugge, Kenya’s Central Bank governor nominee (credit: rights reserved)

Kenyan President William Ruto has nominated ex-IMF senior economist Kamau Thugge as the next governor of the Central Bank of Kenya.

Kamau Thugge’s nomination comes after a competitive recruitment process that saw six candidates interviewed by the public service commission (PSC). 

Should he get the nod from parliament, Thugge will become the 10th governor of the Central Bank, succeeding Patrick Njoroge whose second four-year term ends in June.

“Thugge is very hardworking and passionate about finance. He is coming in at a time [when] we have a revolution in the financial sector following the growth of fintech companies,” says Kuria Kimani, chairperson of National Assembly’s finance committee. 

Local and international experience

65-year-old Thugge once served as the principal secretary at the National Treasury (2013-2019) under President Uhuru Kenyatta.

However, his tenure ended abruptly when he was arrested alongside his then boss Cabinet Secretary for National Treasury Henry Rotich in July 2019. They were both accused of inflating contracts to construct two mega dams (Arror and Kimwarer) in the Rift Valley at a cost of $456m – with some claiming the cost may have been inflated to nearly $630m. 

If approved, Thugge will be deputised by Susan Koech, a banker and formerly the principal secretary for Tourism and Wildlife. In 2019, Koech had also been charged alongside Thugge in the dams scandal, but was freed in order to become state witnesses against Thugge’s boss at the time, Rotich. 

Between 2004 and 2008, Thugge previously served in the ministry of finance as head of fiscal and monetary affairs, economic secretary and senior economic advisor. He once worked at the IMF (1985 – 2010) starting off as an economist, then as senior economist, and finally as a deputy division chief. “The nominee is a career economist who has served in senior positions within fiscal, monetary and economic policy-making positions both locally and abroad,” says a statement from Ruto’s Chief of Staff Felix Koskei. 

Before his appointment as PS, Thugge served as a senior economic advisor at the ministry of finance between 2010 – 2013 after leaving the IMF.

He is a graduate of the University of Nairobi (Economics) with a Masters degree in Economics and Doctor of Philosophy in Economics, both from Johns Hopkins University, US.

Competitive race

Thugge beat five other candidates interviewed by the PSC for the job, including Adan Mohamed, the former cabinet secretary for industrialisation and trade. Mohamed is also a prominent banker who previously served as the managing director of Barclays Bank East and West Africa (now Absa).

Nancy Onyango, an experienced accountant and corporate executive who is currently a director at the IMF, was also interviewed for the job alongside two former CBK deputy governors Edward Sambili (2001-2004) and Haron Sirima (2011-2015).

Dorcas Muthoni Mutonyi, an entrepreneur and computer scientist, was the sixth candidate. 

Thugge was already a favourite, having come from the president’s inner circle as a senior advisor and head of fiscal and budget policy and a member of the president’s Economic Council, which is chaired by veteran economist David Ndii. 

Dr. Thugge was a key cog of the team that designed Kenya’s current fiscal decentralisation system following the advent of devolution

He was instrumental in the design of devolution laws and public finance policies into the devolved structure following the promulgation of the 2010 Kenyan constitution. “Dr. Thugge was a key cog of the team that designed Kenya’s current fiscal decentralisation system following the advent of devolution,” says the letter from Ruto’s chief of staff, Koskei. 

Thugge and Rotich crafted President Uhuru Kenyatta’s economic policy from 2013, which involved a higher appetite for borrowing. Under their watch, Kenya’s debt register rose from KSh1.9trn to KSh6trn by July 2019 when they were sacked. By then, foreign debt had grown by over 370% largely due to sovereign bonds and Chinese infrastructure loans. 

Task ahead

And as he awaits his vetting and approval by Parliament, part of Thugge’s early assignments will be to stabilise the Kenyan shilling against the American dollar, which has taken a hit over the past year. Ruto’s administration was forced to seek a government-to-government oil deal that allows oil importers up to six months of credit, to ease off the demand for the USD. Kenya needs about $500m for import of petroleum products.  

Thugge also comes in at a time the government is keen on reducing appetite for external debt in favour of local revenue building and local borrowing.

According to Ruto’s first budget that takes effect in July, the government hopes to borrow over 70% of its deficit (KSh521bn) from local markets. This means Thugge will be instrumental in availing government securities from the domestic financial market through treasury bills and bonds. 

If approved, Thugge will work closely with the current finance minister, Njuguna Ndung’u, himself a former governor of the CBK (2007-2015). 

The PSC is expected to begin recruiting a second deputy governor to replace Sheila M’Mbijjewe, who together with Njoroge, have served in their capacities since 2019, their tenure now non-renewable. 

“Dr Njoroge will be remembered for having seen through [the] moving away from fixed interest rates to flexible rates where banks are allowed to have a small variance above the Kenya Banks Reference Rate,” MP Kimani tells The Africa Report .

In 2017, the Kenyan government had capped lending interest rates in what was seen as a campaign strategy by the then Kenyatta regime. The rates were later removed by Parliament in November 2019. 

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