Nairobi — Nominee for Central Bank of Kenya Governor post Kamau Thugge has defended the proposed Finance Bill 2023 despite vehement opposition from various stakeholders, insisting it will be the magic wand that will grow the nation economically.
Thugge who was being vetted by the Finance and Planning Committee dispelled the notion that Kenyans were being overtaxed by the tax bill saying it was poised on bolstering the value chain of the Kenya Kwanza Manifesto which will attract economic growth.
"If we pass the Finance Bill before Parliament, we will improve the trajectory of this country and reverse the manufacturing growth to the GDP of this country which has been declining," he said.
On the controversial 3 percent Housing Fund that has received criticism from various stakeholders, the Former Treasury Principal Secretary insisted that the fund is a catalyst to investments in the future.
Thugge pointed out that this economic trajectory will attract local and foreign investment as well as reduce the debt appetite ratio to fund government projects.
"We are starting our journey a bit late but I believe it's a journey that we should start to increase our saving so that we can increase our investment. It's a saving, it's not a tax," he said.
"The jobs that are going to be created will reduce crime and increase income growth. Its only about housing investment but the general impact on the economy which will attract foreign investment from Europe."
The Housing Fund has stirred debate with Azimio leaders stating the Finance Bill unfairly targets a middle class that is already enduring great hardships and has the least amount of money available to pay additional taxes.
The CBK nominee is proposing the issuance of locally sold dollar denominated bond with the government offering good rate to aid liquidity.
He noted that the government wants to Kenyans an incentive to stop stockpiling dollars in bank and release the money into the economy.
During his vetting before the Finance and Planning Committee, Thugge who cited media reports stated that Sh1 trillion had been deposited in the local banks in the form of foreign currency at a time when the country is facing a dollar shortage.
The shilling has been depreciating to the dollar which has been attributed to the global recession which has been precipitated by the ongoing Russia-Ukraine War and the aftermath of the COVID-19 pandemic.
"I am looking at the possibility of issuance of dollar denominated bond the way we issue infrastructure bond. We structure it and issue locally and offer better rate that we will have the possibility of increasing liquidity in the system," Thugge stated.
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The Former Treasury Principal Secretary told MPs that once approved as CBK governor he will ensure there's more consultations with the banking sector to tap on the foreign currency deposited in the industry.
"The foreign currency deposit has reached at least Sh1 trillion. We may need to see what is not happening in the foreign exchange market that is making Kenyans to hoard the deposit in dollars and not in Kenyan currency," Thugge stated.
President William Ruto's administration put in place a short measure of reducing the dollar shortage crisis through government-to-government importation that is estimated to reduce the demand by 500 Million dollars.
Thugge however dispelled the notion explaining that the measure undertaken by the government has managed to ensure the situation doesn't worsen despite the narrow margin.
"I would not look at it that way because the fact is that exchange has removed the demand by 500 million dollars per month. Had we not had that deal then the exchange rate would have moved so badly," he said.
The adept economist told the Finance Commitee that his net worth is Sh450 million which includes properties in Mombasa, a plot of land in Ridgeways, Kiambu Road and in Thika Greens.
President William Ruto nominated him on May 15, following the imminent retirement of Patrick Njoroge, whose two terms end next month.
