Although the possibility of dollarization of the Kenyan economy and the perception of a high level of risk are the factors highlighted to counter the project, the CBK has sufficient foreign exchange reserves to cover several months of imports.

Kamau Thugge (photo), the proposed candidate to replace Patrick Njoroge as Governor of the Central Bank of Kenya, intends to test foreign currency bonds in the local market. According to the executive, local banks have solid reserves to finance the Kenyan economy.

He believes that the foreign currency assets of commercial banks in Kenya are close to $7.3 billion, and an awareness campaign will be carried out to encourage those who hold them to invest in government-issued debt securities. 

This proposal is contrary to the position of the outgoing Governor of the Central Bank, Patrick Njoroge. The latter stressed that foreign currency deposits in commercial banks were not idle, and disputed the idea that such foreign-currency-denominated bonds could absorb surplus dollars. In his view, the implementation of such a strategy could fuel the dollarization process of the Kenyan economy.

In any case, the trade-offs are complex for the incoming governor. Like many African countries, Kenya's access to international capital markets is very costly, due to an exaggerated perception of the level of risk. At the same time, the Central Bank of Kenya currently holds $6.49 billion in foreign exchange reserves, equivalent to 3.62 months of import. This level is deemed sufficient to cushion any short-term shock on the foreign exchange market.