The national interest in fights at EA Portland Cement is unclear
Mr. William Lay (left) and Industrialization and Enterprise Development Principal Secretary Dr. Wilson Songa address the press shortly after Mr. Lay was announced as the new Chairman of East Africa Portland Cement Company at the firms offices in Athi River on February 10, 2014.
What you need to know:
- Does somebody care about the signals and messages we are sending out there about investor protection and respect for minority rights?
- What the Competition Authority calls unwarranted concentration of economic power has become the norm in most of the manufacturing and service sectors of our economy.
- The shenanigans and endless games at Portland are hurting the small shareholders of this company.
I still do not understand why President Uhuru Kenyatta has allowed himself to be dragged into the murky battles over the affairs of the Athi River-based East African Portland Cement Ltd.
Why is it that every new principal or Cabinet secretary who is appointed to head the docket of industrialisation must kick up a fight which almost invariably ends up in protracted court battles for control of this company?
Even more pertinent: Why is it that every other new Cabinet secretary is prepared to raise the stakes in this battle so high — and make the disagreement so intense — that one might be mistaken to believe that wresting control of the company from the French conglomerate, Lafarge, has suddenly become a matter of life and death for Kenya?
The latest episode in this all-too-familiar war was the High Court decision on Monday to nullify the decision by President Uhuru Kenyatta to remove the chairman of the company, Mr Mark ole Karbolo.
The cast may be different, but the script is the same. Two years ago, former president Mwai Kibaki was made to suffer the same embarrassment when the High Court overturned his attempt to remove Mr Karbolo as chairman of the company.
In one incident, former Industrialisation minister Amason Kingi even suspended the whole board of the company, citing allegations of procurement irregularities.
Former Industrialisation permanent secretary Karanja Kibicho quickly weighed in by sending home the company’s managing director, Mr Kephar Tande.
All these actions were thwarted by the High Court.
Then there was the time when the Industrialisation Ministry brought in the Efficiency Monitoring Unit ostensibly to audit the books of the company, but in reality, it was to dig up dirt and provide ammunition to be used by the ministry in its attempts to discipline the directors of the company.
MINORITY RIGHTS
In the build-up to the controversial annual general meeting last month, the government tried to increase board seats from seven to 11 by increasing the nominees of both the National Social Security Fund (NSSF) and the government — to the exclusion of Lafarge.
Where is the national interest in this unending dispute? Does somebody care about the signals and messages we are sending out there about investor protection and respect for minority rights?
Yes, Lafarge is dominant in terms of the stakes it holds in two of the largest cement makers. But is concentration of market power the key issue here? We have fairly comprehensive anti-trust laws in this country, but they are honoured more in breach than in practice. Today, one can say that what the Competition Authority calls unwarranted concentration of economic power has become the norm in most of the manufacturing and service sectors of our economy.
Just look at the structure of the beer industry, the soft drinks sector, the mobile telephone industry, the maize milling industry, or even the media and banking industries.
NOT THE REAL REASON
In our context, you risk being accused of selective application of the law if you single out one company.
Clearly, concentration of economic power is more the excuse rather than the real reason we are seeing the unending shenanigans at East African Portland Cement.
The cement industry in Kenya has grown phenomenally in the past five years. Several new players have come on the scene. From a situation where you had three clinker and cement manufacturers, namely East Africa Portland Cement, Bamburi, and Athi River Mining, there are now seven new cement manufacturers competing for a share of the pie. Nigerian billionaire, Aliko Dangote has announced a two million tonne greenfield project which he plans to commission in 2016.
In the circumstances, the conversation we should be having is how to make our local cement industry competitive and more aggressive in export markets. Even with the new cement factories, we are still too small compared to the big exporting facilities located in India, Thailand, Middle East, and Egypt.
The shenanigans and endless games at Portland are hurting the small shareholders of this company. The ordinary contributor to the National Social Security Fund — with a 27 per cent stake in East Africa Portland Cement — has lost millions of shillings since the wars started.
