Most companies are on the wrong side of the law on gender parity

More than a third of the companies listed at the Nairobi bourse do not have women directors as State-owned firms outperformed private companies on boardroom gender equality, a study by Kenya Institute of Management has found.

The study says 34 per cent of the 57 companies listed at the Nairobi Securities Exchange (NSE) do not have a woman on their board at a time when the capital markets regulator is pushing for mandatory gender caps.

Women occupy only 54 out of the 449 seats on the boards of the NSE-listed companies, representing a 12 per cent share of the directors compared to 20 per cent among state-owned firm.

The Kenya Institute of Management blames the reliance on old-boy networks for directorship appointments since boards have traditionally been made up of retired males of similar backgrounds who recruit from a network of friends.

The female under-representation at the top level of big business has also been caused by the requirement that one has either previous boardroom or executive experience, especially that of CEO and chief financial officer.

“There was no deliberate effort in gender consideration. The process of appointment seemed to be gender blind,” said David Muturi, the chief executive of KIM in the research report done in February and titled ‘Bringing the other half to the board’.

Of the listed firms in the main NSE market, only two — Kenya Re and Uchumi Supermarkets — have women chairing their boards.

Nelius Kariuki, the chairman of the listed re-insurer was appointed in 2007 while Uchumi’s chairperson Khadija Mire was selected in October last year.

At present, only two women — Maria Msiska (BOC Kenya) and Nasim Devji (DTB Bank) — are chief executive officers in publicly listed companies.

Kenya Re had a woman CEO, Eunice Mbogo, until 2010 when she was replaced by Jadiah Mwarania.

Lack of women in directorships is said to be preventing the flow of fresh ideas into boardrooms where the ticket to a seat is often influenced by factors other than merit. “The exclusion of women is robbing the corporate world of a lot of talent,” says Deloitte CEO Sammy Onyango.

A study by global consultancy firm McKinsey in 2007 found that companies with significant numbers of women in senior management did better on a range of criteria, including leadership, accountability and innovation. These attributes were associated with higher operating margins and market capitalisation.

This forms the reason why the Capital Markets Authority (CMA) is showing a bias towards the quota system in appointment of directors that would break male domination of the corporate world’s most important decision-making organs.

Proponents of the quota system say it helps to break the vicious cycle by increasing the number of women at the top, who in turn invite other women into the boardrooms.

In seeking the quota system, Kenya will be following in the footsteps of some European countries that use similar laws to bridge gender imbalance, especially Nordic countries like Norway — which gave listed companies two years in 2005 to raise the number of women in the boards to 40 per cent.

But the European Union in October scrapped the plan to force all publicly traded companies to have 40 per cent of women on their boards after lawyers ruled that mandatory gender caps were illegal under the bloc’s treaties.

Companies in the commercial, industrial and agriculture sectors have male dominated boards unlike those in the financial sector. The share of female board members is also high in companies majority-owned by multinationals.

Firms with women-friendly boards include Safaricom, KenGen, East African Breweries, and Nation Media Group, which have three women each and Standard Chartered Bank that has two women.

The reduced role of women in Kenya’s boardroom is out of step with the spirit of the Constitution, which states that no gender should occupy more than two-thirds of boardroom seats in State-owned companies or in firms where the government’s ownership is more than 50 per cent.

Of the listed State firms, only KenGen is compliant with the constitutional requirement on gender.

The power producer has a third of its 12 member board made of women — making it one of the few State firms in compliance with the Constitution.

This story was first published in the ‘Business Daily’