What South Sudan needs to know about the governors of central banks in 21st Century
By Gabriel Garang Atem, Juba, South Sudan
May 10, 2016 (SSB) — Within the EAC, central bank governors in Uganda, Kenya, and Tanzania hold PhDs in economics with impressive academic and professional experiences in managing economic systems. The academic and professional details of central bank governors of Congo and South Sudan were not available on their banks’ websites.
The governor for National Bank of Rwanda has an MBA. He oversaw the elaboration and implementation of Rwanda’s 1st Economic Development and Poverty Reduction Strategy (EDPRS I) under which Rwanda was able to reduce poverty by 12% in 5 years (2006-2011). This exceptional contribution justifies his current role as governor.
South Sudan recently joined the EAC, a process that has left the country divided – on whether it was right or wrong. The proponents for joining the EAC argued that capacity building and learning by seeing were some of the benefits that will accrue to South Sudan.
There is now a trend in the EAC, that a governor must be highly qualified in economics or must have been a tested achiever as the case in Rwanda. With frequent visits of financial crises – commodities induced and contagion problems in a globalized financial system, the role of central bank governors to handle risks and manage economic growth trajectory is now more important than before
When the term of Prof Ndungu, former Central Bank of Kenya governor expired in March 2015, Kenya government advertised the position together with that of a deputy governor. The governor’s position attracted 22 applicants of who is who of Kenya best trained economists.
At the end, Public Service Commission shortlisted only 5 with econ PhDs; and from whom, 3 best candidates were sent to the President of Kenya, where he chose a Yale econ- PhD trained and former IMF economist.
Competitive recruitment, provides an opportunity for a country to get interests from her best talents, it reduces arbitrariness of appointing authority, and it creates confidence in the governor and government at large. Without competitive recruitment, the skills and competencies of the governor are soft spot for questioning.
Competency, and competitive recruitment aside, independence of governor and the bank is key. People recruited to the board and monetary policy committee must be people of high integrity and qualifications. Term of tenure must be guaranteed to enable the bank pursue its objectives without political blackmailing.
In two and half years of war, economic condition has worsen in South Sudan. High inflation rate induced by exchange rate and deficit financing has checked the ability of central bank to maintain macroeconomic stability, and economic growth has slowed.
As a fragile state, money laundering and financing terrorism are real threats in South Sudan. Establishing credible payment system is desirable to monitor financial transactions. 2015/2016 budget is 70% deficit financed; as provider of last resort, central bank plays a role in public borrowing and ensuring stability to the financial sector.
It is a tough balance that requires good understanding of the links between financial sector entities, and exposure to the wider economy. Independence and technical capacity are keys to navigate through such tough times. Reform in financial sector therefore start with a governor.
It is high time transitional government of national unity tries to value knowledge by recruiting a governor of central bank through a competitive process. If no qualified South Sudanese is available, there is a precedent that a governor doesn’t necessarily needs to be a citizen. Any qualified and competent foreigner can do.
If South Sudan will be competitive within the EAC, it must deploy qualified and competent persons to her key institutions, no country competes on mediocre.
There are many who believe now I should reveal my preferred choices for a governor. If I do this, this contradict the thesis that I am advancing – that the position must be advertise, qualified and competent South Sudanese will declare themselves. Anything less, is an incomplete inventory taking.
On March 2015, Juma Victor in article published in Kenya business daily, “Why these people are fit to serve as next CBK governor”, paraded six possible candidates from whom the industry and policy makers expect one of them to be the next central bank of Kenya governor.
Current CBK governor was not in these six persons paraded by Juma Victor. The current governor was in Washington working for the IMF and hence he was not known to the industry and policy makers. But because of competitive recruitment process, he declared his interest and his credentials pulled him to become the governor of CBK.
This time, South Sudan must ask her citizens to declare their interest and credentials for BSS governor’s job and we might see a better menu of competencies – in addition to already known competitive Econ-PhDs. Even non-econ PhD, delivers as Rwanda is a case in point. So long they are recruited on merit.
Garang Atem Ayiik is an independent economic commentator who lives in South Sudan; garangatemayiik@gmail.com
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