Micah Cheresem, then CBK Governor as he displayed the new Sh500 notes in 1998. When then 42-year-old Micah Cheserem took over from Eric Kotut as the Governor of scandal-hit Central Bank of Kenya (CBK) in 1993, there were murmurs.
The secretary of opposition party DP John Keen said this was “a Kotut taking over from Kotut.”
Because he hailed from Elgeyo Marakwet District, some critics were quick to speculate that perhaps the then powerful minister Nicholas Biwott, who also came from the area, had a hand in his appointment. While acknowledging his financial experience, The Standard noted that Cheserem lacked “political gravitas and experience of the sort bureaucratic infighting that is part and parcel of the public service.” READ MORE
CBK data shows lenders recorded a profit before tax of Sh96.4 billion in the first half of this year.
The then Ford Asili MP for Shinyalu, Japheth Shamalla, taking a swipe at Cheserem’s lack of professional qualification and experience, said this was not the time to experiment with novices at CBK. The apex bank, he said, needed someone with substantial banking experience.
Cheserem, just like his predecessor, was neither a trained economist nor a seasoned banker. He joined CBK from East African Industries (now Unilever), where he was chief accountant.
Yet, he was taking over a battered CBK whose compromise had nearly brought the economy to its knees.
Rather than being business-as-usual, Cheserem’s replacement of Kotut turned out to be like the natural pattern of the day replacing the night.
While Kotut had caused prices of basic commodities to rise by over-printing money, Cheserem’s attempt to mop up the excess liquidity in the economy made money disappear.
However, there is consensus that Cheserem was able to achieve his assignment by the time he left office in a huff in 2001. So much so that he was named Africa’s banker of the year by the prestigious Euromoney magazine in 1997.
Within three years, Cheserem had restored stability in the banking system through stringent reforms, including the mopping-up of excess liquidity in the economy.He also abolished the exchange control regime, spruced up the Central Bank Act and the Banking Act. The minimum paid-up capital for banks was also raised.Some 11 “political” banks that had been conduits for channelling the additional printed cash into the system, were shut down during his eight-year term. He then placed a moratorium on the licensing of new banks.Policy analyst Robert Shaw, writing for the […]
