Cheserem leaves CMA for role in revenue body

Micah Cheserem resigned on Tuesday from his position as chairman of the capital markets regulatory board, marking the end of a two-year reign during which he is credited with creating policies that restored investor confidence in the stock exchange.

Mr Cheserem was appointed chairman of the Capital Markets Authority board of directors in February 2009 at a time when market confidence had sunk to an all-time low following the collapse of three stockbrokers who went under with investors’ funds.

He quit the CMA post to head the newly created Commission on Revenue Allocation, which will be charged with sharing out the national budget money to the central government and the 47 counties created under the new constitution.

As a non-executive chairman of the CMA board, Mr Cheserem’s role was largely limited to higher level policy and market reforms formulation, while implementation was vested on the chief executive of the regulatory body.

Stockbrokers, fund managers and industry experts said reforms started during Mr Cheserem’s chairmanship had repaired investor confidence, citing implementation of new stockbroker capitalisation and ownership rules and the ongoing demutualisation process as changes that helped instil market discipline.

Job Kihumba, an executive director at Standard Investment Bank, described Mr Cheserem as “accommodating” to market players.

Peter Wachira, a senior investment manager at Pinebridge Investments said the market took his appointment “positively,” which helped to boost investor confidence.

Kassim Bharadia, CEO of ApexAfrica Capital, said Mr Cheserem “brought respectability to the CMA and confidence in the market.” He added that the next chairman should be “a person of integrity, financial discipline and knowledge of the market.”

Mugo Kibati, director general of Kenya’s development blueprint Vision 2030, said the next chairman should “instill confidence in the market without stifling investment.”

As former governor of the Central Bank of Kenya, Mr Cheserem is also credited with having stabilised the banking sector by implementing reforms that stemmed a wave of collapses by the lending institutions in the 1990s.

Mr Cheserem announced his resignation moments before he was sworn in as chairman of the Commission on Revenue Allocation by Chief Justice Evan Gicheru on Tuesday.

He quit the CMA board to comply with requirements of the new constitution, which forbids a member of the commission to hold any other office or employment for gain.

Other members of the commission are Raphael Munavu, J. H. Kimura, Wafula Masai, Meshack Onyango, Rose Bosibori Osoro, Fatuma Abdulkadir, and Amina Ahmed.

At the Revenue Allocation Commission, Mr Cheserem’s team is tasked with sharing out at least 15 per cent of national revenues collected to 47 counties every financial year.

The team will also develop a formula for sharing revenue between county governments and the national government and also develop a concept for sharing revenue among the counties.

Going by the 2010/11 fiscal estimates of Sh990 billion, a total of Sh148.5 billion will be channelled to the counties.

On Tuesday, Justice minister Mutula Kilonzo said the Cabinet had approved Sh111.55 million for use by the commission during the financial year ending July 2011.

The funds will go towards the enactment of the Revenue Allocation Act, salaries and allowances of the commissioners and staff, lease of office space and purchase of furniture and equipment, according to the minister.

“We hope with these resources, you should be able to embark on the noble task of building capacity for the commission,” said Mr Kilonzo.

Execute mandate

The minister directed the committee to execute its mandate without fear of any person or organ of the Government.

“You are a constitutional commission established by the popular will of the Kenyan people. You cannot be seen to be acting on the whims and caprice of any arm of the Government,” he said.

Key on the committee’s agenda will be to have stable and predictable allocations of revenue, promote affirmative action in respect of disadvantaged areas and groups, and develop fiscal capacity and efficiency for county governments.

Also sworn in were members of the Judicial Service Commission (JSC).

It will be chaired by the Chief Justice with its members comprising Attorney General Amos Wako, and chairman of the Public Service Commission (PSC) Titus Gatere.