I have a piece in this week's The East African that reflects on the legacy of Prof. Njuguna Ndung'u as governor of Central Bank of Kenya. When the invitation to do the piece came through I was categorical to the editor that I will steer clear of any intrigues at the Central Bank Kenya and focus on monetary policy.
I had to do this because I was mad at the pedestrian evaluation the former governor was getting from people that the media thinks are knowledgeable about economic policy generally and monetary policy specifically.
One such "expert" is Joe Donde - yes, you got me right; the "hero" who came up with a legislative proposal to regulate interest rates.
Hon. Donde, as his villagers would call him, summed Prof. Ndung'u's legacy as characterised by total failure. He argues that that when Prof. Ndung'u took over the corner office at the central bank, the Kenya shilling was exchanging at KES 67 per USD and when he left it was exchanging at KES 92 per USD.
Clearly Donde doesn't know that there is a difference between real exchange rate and nominal exchange rate. Because if he did, he could noticed that over that period, the real effective exchangs rate appreciated by about 30 percent - meaning therefore that the economy lost competitiveness in the international markets. In such a case, the correction had to be the nominal depreciation.
And Donde applied to be Chairman of the Central Bank of Kenya's board of directors, and didn't make it to the short-list!
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