Professor Njuguna Ndung’u, the governor of the Central Bank of Kenya, and one of the country’s most influential men in economic matters, is not known for being talkative. Partly because of his reticence, the few public remarks he makes are studied carefully.
These days, however, Ndung’u is displaying a wholly different side, allowing himself to be caught up in spectacular public squabbles with politicians over deteriorating economic indicators reflected in high inflation, a weak Kenyan shilling and rising interest rates.
“Policy making is very challenging,” he says. “You have to understand what  the right policy is and understand which tools to use.”
Booking an appointment was a lot easier than actually sitting down with the governor on the day. He postponed twice—from 10am to noon, and then to 3:30pm—so he could attend a grilling from the parliamentary committee on the controversial award of a currency printing tender to De La Rue of France. You would think that facing unforgiving legislators in an unforgiving part of the world would be about the worst thing for a banking regulator who is used to dealing with polished economists and bankers.
“There are no worse days for me,” he says calmly, as he sinks into his black leather seat which squelches in protest.
“I work day and night. There’s no worst day or best day. Today it could be inflation; tomorrow a parliamentary committee wants certain statistics; and so on,” he says.
But looking back, it is obvious that as far as bad days go, some are worse than others. In 2009, the global financial crisis started trickling down to Africa, especially in countries connected to the west like Kenya and South Africa.
Even worse, the financial melt-down—which began in the US with the collapse of the mortgage market—came to Kenya when the country had barely recovered from the violent two-month political crisis of January and February 2008 which had not only scared away foreign investors, but also slowed economic growth and production.
“That recovery was painful. It was painful because 2008 was a difficult year, and 2009 was devastating because by the time we were dealing with the post-election aftermath, the economic crisis hit us,” he says.
When there’s a crisis in Europe or the US, skittish investors fear it will spread to developing countries. In 2009, Ndung’u, who is an associate professor of economics at the University of Nairobi and holds a PhD in economics from the University of Gothenburg, Sweden, was a worried man.
“We tried to understand our
internal crisis, but with the global financial crisis, you were waiting every day, waiting for something to happen.”
For a man who implements quick yet well-thought out actions, the waiting game was unbearable.
It was just past 5pm on a cold Friday in August in 2009. In a dimly lit office at the Central Bank headquarters in Nairobi, Ndung’u, an economics author and a fan of Shakespeare, stared blankly at the markets trading board, his lower lip trembling at the gravity of what he was witnessing. This was tragedy worthy of Macbeth.
What was happening was crazier than anything he could have imagined. Global stock markets were swooning, currencies were being crushed and financial systems across the world were punch-drunk.
From his third floor office, looking out at the skyline of East Africa’s strongest economy, Ndung’u’s well-tuned economic antennae began picking up danger signals. Too late for him; Kenya’s financial system and stock market were already in panic, and the numbers were not looking pretty.
“There was not much we could do. It was the public panic that we were waiting to contain,” he says.
That day, when the global financial crisis hit and he could do nothing about it, was his worst day.
Helpless, he could merely watch as it triggered events that would challenge his reputation as Central Bank governor and plunge Kenya’s economy towards recession. The economy grew by 2.6% that year, compared to 7.1% in 2007. It was all work and no play for the professor.
“We were looking at all avenues to manage it. The other crises we knew [about] were speculative attacks from Europe. But now we were, day and night, looking at what we could do without contradicting domestic policy. Because we had signed Article 4 with the International Monetary Fund (IMF) and so we could not restrict forex controls like South Africa and Tanzania.”
This meant that the humble Kenyan shilling was left to the mercy of the crisis. It was pummelled daily as investors dumped it and scampered for safety to international currencies like the dollar.
This was not good for Kenya, as it further squeezed an economy emerging from intensive care.
This is the man named after a leprosy outbreak, that hit Kenya in the fifties, who takes struggle in his stride. With a smile, he remembers the famine of the 1960s, when the country was forced to eat maize, and the multiple political economic crises of the 1980s.
“Crises will always come and go. Any crisis is a lesson and any challenge must be surmounted,” he says.
Ndung’u is a tall, tireless 60-something with an angular face, a modest voice and a smile that rearranges everything on his face, ending with deep dimples on either cheek. Armed with years of experience in theoretical economics, teaching at the university and working for a number of organisations, he intended to beat the global financial crisis.
No longer would the Central Bank of Kenya sit and wait for an onslaught by the big boys, he resolved. But like many central bankers across the world, Ndung’u was merely chasing shadows.
“Even America didn’t understand until Lehman Brothers collapsed and that’s when we started mapping out who was trading with Lehman and who was holding the toxic assets.”
Lehman Brothers Holdings Inc. was a global financial services firm and the fourth largest investment bank in the USA after Goldman Sachs, Morgan Stanley and Merrill Lynch. It conducted business in investment banking, equity and fixed-income sales and trading, investment management, private equity and private banking.
On September 15, 2008, the firm filed for Chapter 11 bankruptcy protection following the massive exodus of most of its clients, drastic losses in its stock, and devaluation of its assets by credit rating agencies. This is believed to have played a major role in sparking the global financial crisis.
The domino effect spread through the global financial system, and fuelled capital flight from markets thought to have been overly exposed to the so-called toxic assets.
“The beauty of it is that we have a strong financial industry in Kenya. And it has developed. Only we don’t have faith in it; but in CBK we have faith.”
Ndung’u says his academic background combined with his years of experience gave him the upper hand in managing the crisis. He used all the monetary tools at his disposal, such as interest rates to reduce the cash supply in the economy and increased vigilance on banks and other financial institutions, to ensure they were operating within the required liquidity levels.
In spite of the best that his arsenal could muster, the impact of the financial crisis – which is still being felt in certain quarters, especially through inflationary pressures and currency swings—saw the governor being voted as worst performer in Africa by Reuters in 2011. He takes the dubious honor in his stride.
“I don’t fear being rated; it makes you think fast. If you ask them to give you the previous ratings of governors, they won’t show them to you. Rating is a family of indicators and having to control inflation is a weak way of rating. If there’s a shortage of maize and there’s a rise in prices, you cannot say you are going to rate the governor on that. People will laugh at you. But I don’t fight with the media. That’s their business.”
With a demanding job that requires a stiff upper lip, the governor says he unwinds by playing golf on Sundays. But even his madness has a method, and the reason he enjoys golf, he admits, is because ultimately it is about strategy.
“Golf is about the brain: you have to be relaxed in mind and you have to have a strategy. I used to play lawn tennis until I realized I was growing old and my legs were wobbling,” he says.
But it is his football stint during his school days that he talks passionately about.
“My advantage was that I could dodge with the left or right leg and I would use both legs for scoring as well. That’s why you can see my hands are injured and not my legs,” he says, exposing three scars on his left arm from his footballing days. His ambidexterity and the game’s ability to stimulate intelligence, vision and strategy stood him in good stead both on the football field and in the wood-panelled offices of the Central Bank.
A nation passionate about football could not wish for a better captain guiding their economic future.
“Soccer requires intelligence, good vision and strategy. And all these qualities are applied in managing the economy,” he says.
Except when a striker, in the shape of a world financial crisis, is tearing your defense apart.

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