Leadership Vacuum Threatens Kenya’s Capital Markets

A major crisis is looming in Kenya’s capital markets after directors at the CMA failed to have their contracts renewed.  The Capital Markets Authority (CMA) also saw its chairperson, Kung’u Gatabaki exiting the regulatory agency.  Appointed by former president Mwai Kibaki, the Standard Digital News reported that Gatabaki will be forced to step down this Friday after three years at the helm of the regulator.

CMA is a statutory agency charged with the responsibility of regulating and developing efficient capital markets in Kenya.  Responding to the looming crisis, Steve Biko, director of Hidalgo Group advised that the administration’s refusal to renew directors’ contracts could be informed by government’s desire to employ loyalists to fill the positions at the CMA.  Biko said, “The current administration is either looking for new directors who will be able to push its agenda or indeed they need to amalgamate the three agencies is what is actually pending.”

He went on to say, “I believe we need to understand what the current administration was trying to do in terms of bringing reforms in the financial sector.  When President Uhuru Kenyatta took over he promised to amalgamate a couple of parastatals and government agencies that had duplicate roles.”

Biko added that the CMA falls under the scope [of consolidation] in terms of the proposed reforms.  Kenyatta’s government has refused to renew contracts of three directors due to moves by the administration to have a consolidated financial sector regulator.  The Kenyan government’s proposed reforms will see the financial sector remaining with one clear agency in terms of streamlining and managing the financial sector as to avoid conflicting legislative regime.

Biko also stated, “The task force that has been appointed by the president is meant to ensure that there is no conflict in legislative framework being passed by different players in the financial sectors.” Agencies at play in the financial sector are the regulatory insurance, the retirement benefits authority and the capital markets authority which are meant to be amalgamated.

Source: CNBC Africa