The High Court has upheld legal restrictions barring politicians and financial-sector insiders from becoming Central Bank of Kenya (CBK) governor or deputy governor.
The court dismissed a Constitutional challenge by an advocate, Ishmael Nyaribo, finding the statutory restrictions protect CBK from conflicts of interest and political influence.
“The restrictions, in Section 14 of the Central Bank of Kenya Act, act as safeguards of the integrity and independence of the recruitment process. That section is designed to prevent severe conflict of interest between regulators and regulated financial entities,” said Justice Roseline Aburili.
The petition arose from a Public Service Commission advertisement published on March 30, 2023, seeking applicants for Governor and Deputy Governor.
The advertisement was published as Patrick Njoroge's second term as CBK Governor and Sheila M'Mbijjewe's term as Deputy Governor were nearing their end.
The petitioner argued that Sections 13, 13B, 13C and 14 of the CBK Act unfairly excluded qualified professionals and violated rights to equality, fair labour practices and fair administrative action.
Sections 13 and 13B govern how the Governor and Deputy Governors are appointed; Section 13C sets their qualifications, while Section 14 determines who is legally barred from holding those positions.
He wanted the said sections declared unconstitutional, arguing that the requirements discriminated against qualified financial-sector professionals and breached the Constitution.
Section 14 bars appointment as Governor, Deputy Governor or CBK director if the person is a legislator, salaried employee of a public entity, or a director, officer, employee, partner or shareholder of a specified bank or financial institution.
The court rejected the argument that the exclusions amounted to unconstitutional discrimination. It found the law made a rational distinction linked to protecting the regulator’s independence.
“I have considered the role of the Central Bank of Kenya as established under Article 231, which is an independent authority tasked with formulating monetary policy, promoting price stability and regulating the banking sector,” the judge said.
It said the law is intended to prevent the “Regulator” from becoming the “Regulated”, reasoning that someone with financial interests in a bank could face an obvious conflict when supervising that institution.
“In the view of this court, that section is designed to prevent severe conflict of interest between regulators and regulated financial entities,” said the judge.
The court also upheld the ban affecting legislators, saying parliamentary approval of CBK nominees creates a conflict if sitting lawmakers can compete for the positions.
“Allowing a sitting legislator to be considered for the post of Governor or Deputy Governor would create a clear conflict of interest, as the same institution would be vetting one of its own,” the court said.
The judgment also addressed the recruitment process. CBK argued that the petition had become academic after the recruitment of Kamau Thugge was completed and was gazetted in June 2023. Susan Koech was also appointed deputy governor.
The court held that completion of the recruitment process did not remove its constitutional jurisdiction. It said the High Court could still examine whether the advertisement, recruitment process or statutory provisions breached the Constitution.
The court found that the petitioner had not shown how the provisions harmed him or professionals.
It found that Mr Nyaribo had legally failed to displace the presumption that the legislation is constitutional. It dismissed the petition, finding it was devoid of merit.
The court found that the petitioner had failed to identify with sufficient precision the people allegedly discriminated against or the specific injury suffered, and had not produced evidence of the claimed "large pool" of qualified professionals affected by the rules.
“There is no evidence adduced by the Petitioner to demonstrate the manner in which the impugned provisions directly, unfairly and/or negatively discriminate against the alleged large pool of professionals in the recruitment of Governor and Deputy Governor of the Central Bank of Kenya,” said the court.
It stated that the restrictions were constitutionally sound, holding that excluding legislators and people with positions or financial interests in regulated financial institutions was rationally connected to preventing conflicts of interest and protecting CBK's independence.
The challenged recruitment proceeded after the High Court declined conservatory orders on May 8, 2023, allowing the selection process to continue.
Parliament records show that 24 people applied for Governor, six were shortlisted, and interviews were conducted on May 9, 2023. President William Ruto subsequently nominated Kamau Thugge, who was approved by the National Assembly in June 2023.
Mr Thugge succeeded Patrick Njoroge, whose two four-year term ended in June 2023. Parliament’s record says the recruitment followed Section 13 of the CBK Act, requiring presidential appointment through a transparent and competitive process with National Assembly approval.
