Koffee with Guv’nor
Governor of the Central Bank of Kenya Professor Ndung’u’s visit to Muscat was part of the African country’s Vision 3030 to build a globally competitive and prosperous nation with a high quality of life

Not everyday do you get a chance to sip coffee with the Governor of the Central Bank of Kenya. So when I received an invitation to meet Professor Njuguna Ndung’u, who was in town in March, I simply ignored my previous engagements to accommodate Alan Greenspan’s kinsman from Africa’s east.

Professor Ndung’u’s signed handout on the Kenyan economy circulated prior to the meeting had only made my decision easier. The three-pager was candid and admitted to a crisis – both political and economic – in Kenya. Expectedly, he had dished out palliatives too. Central Bank governors, by and large, are always circumspect. They prefer a stiff upper lip for the simple reason that every syllable they utter can cause repercussions on a global scale.
“You’re too transparent for a Governor,” is how I opened the dialogue at the sparsely populated lobby level coffee shop at the Grand Hyatt. “I am an academic first, Guv’nor next,” he responded without batting an eyelid. Unmindful of the rush of lensmen capturing his various moods and gestures on their digital cameras, he needed no help-me notes or power point hard copies to buttress his mission in Muscat.

Mission in Muscat
Professor Ndung’u was in Muscat to attract investors to Kenya. “Come to Kenya. It’s the best place to invest,” was his constant refrain. Kenya, of all places? Was the country not in a political soup? Were not the rating agencies downgrading the African nation by a few notches? Questions that needed urgent responses and the Kenyan banking regulator batted flawlessly.

He categorically maintained that Kenya is an emerging economy and not an ‘untouchable’ as some sections of media make it out to be. Contrary to popular perception, the private sector contributes 55 per cent to the GDP. While conceding that the Kenyan economy has had its share of problems during the 1980s and 1990s, he asserts that things have been on the mend. According to him, the GDP in 2006 stood at US$22.1 billion and the country’s per capita income stood at US$626 for the 35 million-strong population. Life expectancy at birth was pegged at 55.3 years and 85 per cent of Kenyans were ‘literate’. Enough to open eyes for the uninformed like me!

The Kenyan Story
During the 1990s, explains Professor Ndung’u, Kenya liberalised its trade regime, removed exchange controls and ushered in legal reforms to strengthen its monetary policy, removed controls on capital movements and above all brought about civil service reforms. During 2003-07, Kenya embarked on an Economic Recovery Strategy (ERS) anchored on three key pillars−achieving rapid and sustainable economic growth within the context of a stable macro-economic environment; enhancing equity and poverty reduction; and, improving governance to enhance efficiency and effectiveness of the economy.

The net result was spectacular: Seven per cent economic growth in 2007 and a US$3 billion forex kitty. It also brought about a lot more stability in the exchange and interest rates. It led to better bilateral relations with the developed world and the Nairobi Stock Exchange index shot up fourfold between 2001 and 2006. Kenya was able to privatise its telecom sector and reduce the government’s role in the economy substantially – resulting in just 11 per cent of GDP coming from the government sector. Remarkable indeed!

What next?
“Vision 2030,” pat comes the reply. The objective is to build a globally competitive and prosperous nation with a high quality of life by 2030. What’s the roadmap? Ten per cent annual growth over medium to long term and plans to build a just and cohesive society enjoying equitable social development in a clean and secure environment. Above all, to establish an issue-based, people-centric, result-oriented and accountable democratic political system.
Kenya has identified six key sectors to fuel growth prospects – tourism, agriculture, wholesale and retail trade, manufacturing, BPO and financial services. The road ahead is tough, no doubt.

What Next?
The irrepressible and optimist 48-year-old economic professor from Nairobi has chalked up a plan to conduct roadshows across Europe and the Gulf to get the funding to achieve Vision 2030 goals. Fitch downgrading Kenya in the recent past does not bother the lanky Kenyan banking regulator. “It’s just a question of time. We will bounce back,” he says with confidence.

The Kenyan visitor’s agenda in Oman is to drum up financial support to help his economy continue on the Vision 2030 march. Islamic banking, he points out, can be one source of funding process. If so, why Oman which does not encourage Islamic banking? Why not the Kingdom of Bahrain, the citadel of Islamic banking? But I don’t ask.
After a recent visit to Kenya, the Singapore-based Bank Julius Baer’s head of investment research had this to say: “In the Kenyan capital of Nairobi, from taxi operators to taxi drivers to hotel staff, the focus is on how and when the power sharing arrangement between the incumbent President and the Opposition leader would be implemented. Thousands of jobs in the tourism industry depend on good governance and political stability. Since riots broke out in January after the political stalemate, many foreigners have cancelled their visits to Kenya.” Is it the same Kenya that Professor Ndung’u has been talking about? I wonder.

The current inflation rate hovers well above 20 per cent and many Kenyans fear that they may be forced to carry millions to the grocery store. Professor Ndung’u himself quotes Kenya National Bureau of Statistics that concurs with the galloping price levels. “This is driven more by supply constraints than from the demand pressure of monetary overhang problem,” he clarifies.

It’s time to wind-up the meeting. As we rise to take leave of the Kenyan visitor, realisation dawns that the rendezvous at the coffee shop with the man from the coffee land was ending without the customary cuppa. We were so engrossed in dialogue that everyone had simply forgotten about the coffee ritual. May be next time. Either in Muscat. Or Nairobi!

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