Why Prof Mariara was called to MPC

It was one of those cold July mornings.

The lecture hall was full to the brim. Dr Mariara--in her characteristic shy personality--walked in, almost unannounced. I was seated three rows from where she was standing. One had to do that--Mariara--now a full professor of economics--rarely shouts or talks in a loud voice. It is also hard to judge her mood. Her facial expression is somewhere between a grin and a smile--permanently.

She had announced a CAT in the previous class and the mood was apprehensive. You see, econometrics is not necessarily a walk in the park. Especially when one has to use up to three different formulas to solve one equation and the fact that if you miss it at the first part of the question then the rest of the work is a waste of time. You only get the few marks for 'correct procedure.'

Needless to say, we sat the test. Save for the paper shuffle and sighs and yawns (from the few brave ladies)--the class was utterly silent. It was the last one before the final main exam. I never saw or heard from her again--until yesterday.

She will now be sitting at the monetary policy committee. Her and a list i will shortly share.

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The call to revamp the MPC has been on for quite sometime. A lot has been said on the monetary policy directives and if they have any effect on the economy. Time and again it has been argued that whatever decision is made at the second floor boardroom of the CBK does not trickle down to the maize farmer in Kitale. The Central Bank Rate-- the rate at which CBK lends commercial banks--has time and again been a casing point of the very failure of monetary policy in Kenya.That banks dont bulge to CBR. That there is need for another tool formulated specifically for the Kenyan market to address monetary policy issues. The big disconnect.

(You can read about it in my past articles, commentaries and opinion pieces here: https://www.standardmedia.co.ke/article/2000049599/which-way-for-interest-rates-charges https://www.standardmedia.co.ke/article/1144024920/bank-ceos-in-a-spot-over-interest-rates/?pageNo=1 https://www.standardmedia.co.ke/business/article/2000065901/was-mpc-too-optimistic-when-it-cut-the-central-bank-rate https://www.standardmedia.co.ke/business/article/2000061391/how-central-bank-almost-choked-the-economy...and so on and so on). This commentary that i did when the Sh lost value to the dollar summarizes the plight of the MPC: https://www.standardmedia.co.ke/article/2000052393/central-bank-s-mpc-did-its-part-the-outcome-was-inevitable/?pageNo=4

It is easy to see why MPC would need a boost in number crunchers as opposed to economic thought theorists. One, we now live in the era of big data. Kenya must come alive to that fact and do something about it. The numbers say everything. Correctly analysed and you might just have a solution. Two, the MPC needed a new face--an fresh blood injection of sorts. The previous office holders had been there for too long. Time and again they were accused of issuing a similar press statement on CBR save for a few comas and figures. Their time was up. Three, these are not normal economic times--Kenya is headed--if not already--in a recession. Four, Treasury has promised to re-look at the interest capping law. The proposals on the table are not to do away with it completely but to redesign that formula as the current one appears to be too harsh on the economy. Then of course, there is always succession politics at the CBK.

MPC is now gender balanced. Well, almost.

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Here are the other persons appointed to the Monetary Policy Committee: 

-Dr. Benson Akong'o Ateng' served in various roles at the World Bank, and is currently the Chairman of the Department of Economics and Development Studies atthe Technical University of Kenya.

-Dr. Margaret Chemengich has served in various public sector positions including as the Permanent Secretary in the Ministry of Trade, Industry and Tourism, Director of Statistics at the Kenya National Bureau of Statistics(KNBS), as well as at the National Treasury. She was also Chief Executive Officer of the Institute of Economic Affairs, and served on the Board of a local commercial bank.

-Mr. Humphrey Muga is a lecturer at the School of Business and Economics at the African International University. He worked at the CBK for many years, and served in the position of Deputy Director, Financial Markets and Banking Department, as well as Deputy Director, Human Resources. He also served as a Board member of the Capital Markets Authority.

One only hopes of a more robust monetary policy stance with these appointments. Hopefully, Prof Mariara will let the figures do the talking.

MA specializes in: Economics| Research| Communications| Media/Public Relations and can be reached on [email protected]