The Central Bank of Kenya ( Amendments) Bill, No. 6 of 2024

SPECIAL ISSUE

Kenya Gazette Supplement No. 43 (Senate Bills No. 6)

REPUBLIC OF KENYA -------"

KENYA GAZETTE SUPPLEMENT

SENATE BILLS, 2024

NAIROBI, 1st March, 2024

CONTENT

Bill for Introduction into the SenatePAGE

The"Central"Bank"(Amendment)"Bill,"2024 .............................................. 65

PRINTED AND PUBLISHED BY THE GOVERNMENT PRINTER, NAIROBI

THE CENTRAL BANK (AMENDMENT) BILL, 2024

A Bill for

AN ACT of Parliament to amend the Central Bank Act and for connected purposes. !

ENACTED by!the!Parliament!of!Kenya,!as!follows-!

1. This! Act! may! be! cited! as! the! Central! Bank! (Amendment)!Act,!2024.!

2. Section!11!of!the!Central!Bank!Act,!in!this!Act!the! principal! Act,! is! amended! by! inserting! the! following! new! subsection!immediately!after!subsection!(1)G!

(2B)! The! office! of! the! Chairperson! is! designated! as! a! State! office! in! accordance! with! Article!260(q)!of!the!Constitution.!

3. Section!13!of!the!principal!Act!is!amendedG! 2. (a) ! in! subsection! (1)! by! deleting! the! words! 'the! National! Assembly'! appearing! immediately! after! the! words! 'the! approval! of'! and! substituting! therefor!the!word!'Parliament'P!and! 3. (b) ! by! inserting! the! following! new! subsection! immediately!after!subsection!(1)G!

(1A)!The!office!of!the!Governor!is!designated! as!a!State!office!in!accordance!with!Article!260(q)! of!the!Constitution.!

4. Section! 14! of! the! principal! Act! is! amended! in! subsection! (1)! by! deleting! paragraph! (a)! and! substituting! therefor!the!following!new!paragraphG!

• (a) ! a!member!of!the!National!Assembly,!the!Senate!or! a!County!Assembly.!

Short!title.!

Amendment!of! section!11!of!Cap.! 491.!

Amendment!of! section!13!of!Cap.! 491.!

Amendment!of! section!14!of!Cap.! 491.!

MEMORANDUM OF OBJECTS AND REASONS

Statement of the Objects and Reasons for the Bill

The!principal!object!of!this!Bill!is!to!amend!the!Central!Bank!Act!to! provide!that!Parliament!shall!approve!the!nomination!of!the!Governor!of! the!Central!Bank.!This!amendment!is!intended!to!harmonize!the!approval! requirements! for! the! various! administrative! offices! in! the! Central! Bank.! Notably,! whereas! the! Act! requires! that! Parliament! approves! the! nomination!of!the!Chairperson!of!the!Board!of!Directors!of!the!Bank!and! the!nomination!of!the!Deputy!Governors!of!the!Bank,!section!13!of!the!Act! contemplates!that!only!the!National!Assembly!approves!the!nomination!of! the!Governor!of!the!Bank.!The!Bill!further!proposes!to!assign!the!offices! of!the!Chairperson!of!the!Board!of!Directors!and!the!Governor!of!the!Bank! as! State! Offices! in! accordance! with! Article! 260(q)! of! the! Constitution.! This!is!to!ensure!that!the!stringent!requirements!applicable!to!state!officers! under!Article!73,!74,!75,!76,!77!and!78!of!the!Constitution!are!extended!to! the!holders!of!the!office!of!the!Chairperson!and!Governor!of!the!Board!of! the!Bank.!

The!Bill! further! proposes! to! align! the! Act! to! the! Constitution! 2010! and!the!fairly!nascent!governance!structure!of!the!country.!In!its!present! form!section!14(1)(a)!disqualifies!a!member!of!the!National!Assembly!or!a! member! of! a! local! authority! under! the! Local! Government! Act! from! nomination!to!the!office!of!Chairperson,!Governor,!Deputy!Governor!or!a! Director! of! the! Bank.! However,! under! the! Constitution,! Parliament! comprises! the! National! Assembly! and! the! Senate! and! the! defunct! local! authorities!were!taken!over!by!the!county!government.!The!Bill!therefore! makes!the!necessary!amendments!align!the!Bill!to!the!Constitution.!

Statement on the delegation of legislative powers and limitation of fundamental rights and freedoms

The! Bill! does! not! delegate! legislative! powers! nor! does! it! limit! fundamental!rights!and!freedoms.!

Statement on how the Bill concerns county governments

The!Bill!proposes!to!subject!the!nomination!of!the!Governor!of!the! Central!Bank!to!the!approval!of!Parliament!that!is!the!National!Assembly! and!the!Senate.!The!Senate!under!Article!96(1)!represents!the!counties!and! serves!to!protect!the!interests!of!the!counties!and!their!governments.!!In! considering!the!suitability!of!a!person!nominated!to!serve!as!Governor!of! the! Central! Bank,! the! Senate! shall! take! into! account! the! powers! of! the! Governor!to! determine! monetary! policy! and! its! effect! of! the! abilities! of! county!governments!to!discharge!their!functions!under!Part!2!of!the!Fourth! Schedule!to!the!Constitution.!!

The!Bill!therefore!concerns!county!governments!in!terms!of!Articles! 110(1)(a)! of! the! Constitution! as! it! contains! provisions! that! affect! the! functions! and! powers! of! the! county! governments! as! set! out! in! the! Constitution.!

Statement that the Bill is not a money Bill within the meaning of Article 114 of the Constitution

The!Bill!is!not!a!money!Bill!within!the!meaning!of!Article!114!of!the! Constitution.!

Dated!the!11th!October,!2023.!

!

EDDY OKETCH,

Senator.

!

Section 11 of the Act of which it is proposed to amend

The!Board!of!Directors!

• (1)!The!Board!shall!consist!of-!
• (a)!a!Chairperson!appointed!by!the!PresidentP!
• (b)!a!GovernorP!
• (c)! the! Permanent! Secretary! to! the! Treasury! or! his! representative,! who!shall!be!a!nonGvoting!memberP!
• (d)!!eight!other!nonGexecutive!directors.!

(2)! The! chairperson! and! directors! appointed! under! paragraph! (d)! of! subsection! (1)! shall! be! appointed! by! the! President! with! the! approval! of! Parliament! and! shall! hold! office! for! a! period! of! four! years! but! shall! be! eligible!for!reGappointment!for!one!further!term!of!four!years.!

(2A)!The!chairperson!shall!be!appointed!by!the!President!through!a! transparent!and!competitive!process!and!with!the!approval!of!Parliament,! and! shall! hold! office! for! a! term! of! four! years! but! shall! be! eligible! for! reappointment!for!one!further!term.!

(3)!The!members!of!the!Board!shall!be!appointed!at!different!times!so! that!the!respective!expiry!dates!of!the!members'!terms!of!office!shall!fall! at!different!times.!

(4)!A!member!of!the!Board!may!resign!his!office!by!writing!under!his! hand! addressed! to! the! President! which! resignation! shall! take! effect! one! month!from!the!date!of!receipt!of!the!letter!of!resignation!by!the!President.!

• (5)! If! the! Chairperson,! Governor! or! a! director! dies! or! resigns! or! otherwise! vacates! office! before! the! expiry! of! his! term! of! office,! the! President!shall!appoint!another!person!in!his!place.!
• (6)! Where! the! Chairperson,! the! Governor! or! a! director! is! unable! to! perform!the!functions!of!his!office!due!to!any!temporary!incapacity!which! is! likely! to! be! prolonged,! the! President! may! appoint! a! substitute! for! that! member!of!the!Board!to!act!with!the!full!powers!of!the!member!until!such! time!as!the!President!determines!that!his!incapacity!has!ceased.!
• (7)!A!person!shall!be!eligible!to!be!appointed!a!Director!if!he-!
• (a) ! is!a!citizen!of!KenyaP!and!
• (b) ! is!knowledgeable!or!experienced!in!monetary,!financial,!banking! and! economic! matters! or! other! disciplines! relevant! to! the! functions!of!the!Bank.!

Section 13 of the Act of which it proposed to amend-

(1)! There! shall! be! a! Governor! who! shall! be! appointed! by! the! President! though! a! transparent! and! competitive! process! and! with! the! approval!of!the!National!Assembly.!

(2)!The!Governor!shall!hold!office!for!a!term!of!four!years,!but!shall! be!eligible!for!reGappointment!for!one!further!term!of!four!years.!

(3)!The!Governor!shall!be!the!chief!executive!officer!of!the!Bank!and,! subject!to!the!general!policy!decisions!of!the!Board,!shall!be!responsible! for!the!management!of!the!Bank,!including!the!organization,!appointment! and! dismissal! of! the! staff! in! accordance! with! the! general! terms! and! conditions! of! service! established! by! the! Board,! and! the! Governor! shall! have!authority!to!incur!expenditure!for!the!Bank!within!the!administrative! budget!approved!by!the!Board.!

(4)! The! Governor! shall! be! the! principal! representative! of! the! Bank! and!shall,!in!that!capacity!have!authority-!

• (a)! to! represent! the! Bank! in! its! relations! with! other! public! entities,! persons!or!bodiesP!
• (b)!to!represent!the!Bank,!either!personally!or!through!counsel,!in!any! legal!proceedings!to!which!the!Bank!is!a!partyP!
• (c)! to! sign! individually! or! jointly! with! other! persons! contracts! concluded!by!the!Bank,!notes!and!securities!issued!by!the!Bank! reports,! balance! sheets,! and! other! financial! statements,! correspondence!and!other!documents!of!the!Bank.!

(5)!The!Governor!may!delegate!any!of!his!powers!provided!for!in!this! section!to!other!officers!of!the!Bank.!

Section 14 of the Act of which it proposed to amend-

General!disqualifications!for!all!Board!members!

(1) ! No!person!shall!be!appointed!as!Chairperson,!Governor,!Deputy! Governor!or!a!Director!who!is-!

• (a)! a! member! of! the! National! Assembly! or! a! member! of! a! local! authority! established! under! the! Local! Government! Act! (Cap.! 265)P!
• (b)!a!salaried!employee!of!any!public!entity!(except!on!a!secondment! basis)P!
• (c)! a! director,! officer,! employee,! partner! in! or! shareholder! of! any! specified!bank!or!specified!financial!institution:!

Provided!that-!

• (i)! paragraph!(b)!shall!not!be!applicable!to!the!representative! of!the!TreasuryP!and!
• (ii)!the! President! may! in! exceptional! cases! waive! any! of! the! above! provisions! with! respect! to! any! Director! (other! than! the!Governor!or!Deputy!Governor)!if!it!is!in!the!interests!of! the! Bank! and! likely! to! promote! the! objects! of! the! Bank! under!section!4.!

(2)! The! President! shall! terminate! the! appointment! of! a! chairperson,! Governor,!Deputy!Governor!or!a!director!who-!

• (a)! becomes! subject! to! any! of! the! disqualifications! described! in! subsection!(1)P!
• (b)! is! adjudged! bankrupt! or! enters! into! a! composition! or! scheme! of! arrangement!with!his!creditorsP!
• (c)!!is!convicted!of!an!offence!involving!dishonesty!or!fraud!or!moral! turpitudeP!
• (d)!!is!adjudged!or!otherwise!declared!to!be!of!unsound!mindP!
• (e)!is!absent,!without!the!leave!of!the!Board!from!three!consecutive! meetings!of!the!BoardP!
• (f)! becomes,! for! any! reason,! incapable! or! incompetent! of! properly! performing!the!functions!of!his!office:!

Provided! that! the! appointment! of! the! Governor! shall! not! be! terminated! under! this! paragraph! until! the! question! of! his! removal! from! office!has!been!referred!to!a!tribunal!appointed!under!subsection!(3)!and! the!tribunal!has!recommended!to!the!President!that!the!Governor!ought!to! be!removed!for!incapability!or!incompetence!as!aforesaid.!

(3)! If! the! President! considers! that! the! question! of! terminating! the! appointment! of! the! Governor! under! subsection! (2)(f)! ought! to! be! investigated,!then-!

• (a)! the! President! shall! appoint! a! tribunal! which! shall! consist! of! a! chairman!and!two!other!members!selected!by!the!President!from! among!persons-!
• (i)!!who!hold!or!have!held!office!as!judges!of!the!High!Court!or! the!Court!of!AppealP!or!
• (ii).!who!are!qualified!to!be!appointed!as!judges!of!the!High!Court! under!section!61(3)!of!the!ConstitutionP!

• (b)!the!tribunal!shall!inquire!into!the!matter!and!report!on!the!facts!to! the!President!and!recommend!to!him!whether!the!Governor!ought! to!be!removed.!
• (4)!Where!the!question!of!removing!the!Governor!has!been!referred! to!the!tribunal!under!this!section,!the!President!may!suspend!the!Governor! from!the!exercise!of!the!functions!of!his!office!and!any!such!suspension! may!at!any!time!be!revoked!by!the!President,!and!shall!in!any!case!cease!to! have!effect!if!the!tribunal!recommends!to!the!President!that!the!Governor! should!not!be!removed.!

Special!disqualifications!for!Governor!and!Deputy!Governor!

• (1) ! The! Governor! and! the! Deputy! Governor! shall! owe! their! allegiance! entirely! to! the! Bank! and! shall! not! engage! in! any! paid! employment!or!business!or!professional!activity!outside!the!duties!of!their! respective!offices:!

Provided!that!nothing!in!this!subsection!shall!prevent!the!Governor!or! Deputy! Governor! from! accepting! or! holding! any! academic! office! or! position! in! an! institution! of! higher! learning! or! any! advisory! position! or! membership!in!any!committee!or!commission!with!public!responsibility,! or!from!serving!in!any!international!financial!institution!of!which!Kenya!is! a!member!or!with!which!Kenya!is!associated,!or!any!specialized!financial! institution!established!by!the!Government.!

• (2) ! If! the! Governor! or! the! Deputy! Governor! engages! in! any! paid! employment!or!business!or!professional!activity!outside!the!duties!of!his! office! contrary! to! subsection! (1),! the! President! shall! terminate! his! appointment:!

Provided!that!in!the!case!of!the!Governor,!the!provisions!of!section! 14!shall!apply.!

• (3) ! The! President! may! specifically! exempt! any! transactions! or! activities!from!the!restrictions!of!this!section.!

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