For Njuguna Ndung’u, his dismissal along with 21 other cabinet ministers two weeks ago marked the end of one of his most difficult tenures as national treasurer.
Professor Ndung’u, a quiet economist, took over as Treasury Minister when the country was facing one of its worst dollar shortages, and as fate would have it, he left just as the country was experiencing unprecedented youth-led anti-government protests.
Interestingly, Professor Ndung’u was in charge of the National Treasury, which was responsible for The first time she sought to impose a tax on bread In a series of tax measures that have sparked protests across the country as Kenyans attack the government over what has been seen as a punitive Finance Bill 2024.
Parliament later rejected the professor’s bid to impose a tax on bread, weeks before President William Ruto was forced to reject the 2024 Finance Bill in an attempt to quell the protests.
The rejection of the Finance Bill has left a gap of Sh346 billion in the 2024/25 budget, leading to a series of cuts in national and local governments.
But it is his admission of a bankrupt state treasury and mounting debt repayment obligations that best describes Professor Ndung’u’s travails in one of the country’s most lucrative ministerial posts.
“We have had difficulties in paying salaries, we are paying salaries in arrears. Imagine that. But we cannot default on external debt because our credibility will be destroyed. It is the debt that will pay the price first,” he told the parliamentary Finance and National Planning Committee in December last year.
Six months later, billions of dollars in World Bank loans helped Kenya repay a $560 million Eurobond that matured last month. That was a huge boost that gave Prof. Ndung’u some breathing room.
The Treasury had acknowledged in February this year that there were concerns about Kenya’s ability to settle Eurobonds due to the volatile value of the shilling and a shortage of dollars.
In March, Professor Ndung’u acknowledged the difficulty he was facing in trying to increase revenue without putting pressure on Kenyan workers’ salaries.
“The second point is that we need economic recovery so that we can generate higher taxes because the current economic structure and dynamism and economic activity are too low to support VAT,” he added at the IMF’s 12th African Financial Forum.
For workers and businesses, Professor Ndung’u was the face of punitive taxes that threatened the livelihoods of millions of Kenyans.
The ugly side of his tax campaign was exposed in its threatening light mid-last month when Kenyans, led by youth, took to the streets in protests that culminated in the withdrawal of the Finance Bill 2024.
One of Professor Ndung’u’s first tasks when he took up his post at the Treasury was to address the dollar shortage that threatened many sectors and businesses.
He was part of the team that crafted the import deal between the government, Saudi Aramco, Abu Dhabi National Oil Company and Emirates National Oil Company in March 2023, which allowed Kenya to import fuel on a 180-day credit period.
Despite countless unanswered questions, the fuel deal has been a major factor in reducing monthly demand for dollars and boosting the shilling to below 130 to the dollar from a record low of 160 earlier this year.
Under Prof Ndung’u’s watch, Kenya breached the Sh10 trillion debt ceiling in May last year. That was after borrowings reached Sh10.027 trillion, with the borrowing spree leaving the Treasury Secretary with more questions than answers.
A month later, lawmakers threatened to impeach him over his continued failure to meet parliamentary summonses and delays in disbursing his fair share to the 47 provincial governments.
Professor Ndung’u’s 22-month tenure as National Treasurer from September 2023 until his exit two weeks ago was a firefighting exercise.
Like any other public servant, he was hoping to replicate his largely successful tenure at the Central Bank of Kenya as head of the National Treasury.
Professor Ndung’u’s tenure as Governor of the Central Bank of Kiribati from February 2007 to May 2015 has been described by many as a success, with market observers praising his legacy of financial services regulation, monetary policy and stability oversight in the wake of post-election violence in 2007 and 2008.
But as fate would have it, a combination of factors, including economic woes and pressure on Dr Ruto to act and restore hope to Kenyans, led to his claim to the position at the helm of the country’s economic policy bureau.
As his successor, John Mbadi, prepares to take over, Professor Ndung’u may be enjoying a good night’s sleep, free from the headache of trying to stabilize an economy whose signs of recovery appear to be derailed by ongoing youth-led protests.
As was the case even while he was National Treasury Minister, Professor Ndung’u has been careful to avoid the media since his dismissal.
