The rich work history and vast experience in matters economics coupled with playing crucial roles in formulating result-oriented fiscal policies, are perhaps the reason President William Ruto settled on Dr. Kamau Thugge as a fitting replacement for the position of the Central Bank of Kenya (CBK) Governor.
Thugge, who did his Bachelor’s, Master’s and PhD in the US, worked for 20 years at the International Monetary Fund (IMF) in Washington DC.
The CBK Governor nominee’s career is not devoid of twists as he was implicated in the Kimwarer and Arror dam scandals, until the former Director of Public Prosecutions Noordin Haji, now NIS Director General withdrew charges against him, making him a State witness against his former boss Henry Rotich, who would later be hounded out of office.
Haji also withdrew charges against former Tourism and Wildlife Principal Secretary Susan Koech currently serving as the Deputy CBK Governor, deputising Thugge.
This made him interact with all kinds of securities, including sovereign bonds.
History books have it that Thugge was the brain behind Kenya’s decision to issue its first Eurobond making Kenya shift towards economic self-reliance.
While at the Ministry of Finance as the Director of Fiscal and Monetary Affairs during the late president Mwai Kibaki administration, Thugge succeeded in persuading then Finance minister not to factor in donor budgetary support.
This is a policy that has been followed to date and has resulted in reducing Kenya’s dependency on donor support, albeit with a price. Kenya taking this route meant that it had to go the whole hog.
With the aid tap closed, money to finance Kenya’s budgetary needs had to come from somewhere else.
That included taxes, which were meagre for a country whose economic activities were still muted with the country emerging from years of economic mismanagement by the late president Daniel Moi’s regime.
The government also had to borrow from domestic investors and relying on the slow and unreliable inflows from development finance institutions (DFIs) like the World Bank to fund its budget.
Another notable shot in the arm for the economy was when Thugge and other Treasury officials initiated structural reforms that resulted in the sharp reduction of operating licenses from more than 1,400 to less than 600.
This move saw improvement in the ease of doing business with Kenya poised for increased trade and investment.
Thugge also persuaded then Finance minister to agree to get Kenya rated by global credit rating firms Standard & Poor’s and Fitch.
“My main intention was to bring international discipline in formulating and implementing our economic policies (especially macro-economic policies) as these ratings would provide an independent assessment of our economic performance.” Thugge said during his vetting session for the CBK Governor’s post.
“And, secondly, to start the process of issuing a sovereign bond so as to diversify the sources of funding the budget and further reduce Kenya’s reliance on donor support.” He added.
In the confusion that surrounded the country’s debut Eurobond in 2014 with Opposition leader Raila Odinga claiming some of the proceeds of the $2.75 billion Eurobond had been stolen, Thugge remained calm.
He had spent more than 12 years at the National Treasury, knew more about the Eurobond than many other Treasury officials who had little experience outside of the Kenyan border.
However, there are critics to Kenya’s entry into the Eurobond market, saying it’s economic bondage, while others think it was the right thing to do.
If anything, the Eurobond (and Chinese loans), according to experts, is just one of the ways through which African countries can escape the dependency cycle perpetuated by donor funds, and Thugge knew it.