This country sorely needs a Capital Markets Authority chief with clout

Tuesday July 3 2012



My long experience in journalism has taught me that a public official who has just left office will always be an invaluable source of news and information.

If your approach is right, and as long as it is a source who has your confidence — somebody you have engaged long enough for him or her to know that you are a journalist who protects sources and will not betray confidence by attributing facts and information given to you on the basis of anonymity — you can get a public official to reveal to you even the best kept of secrets.

It gets even better in circumstances where the public official has been sacked unfairly, forced to leave over a matter of principle or through outright hostile tactics by power players.

I have been chasing the out-going chief executive of the Capital Markets Authority, Ms Stella Kilonzo, for an off-the-record chat for weeks, ever since she announced that she was quitting.

I wanted to engage her on a whole range of issues and ask her many questions. Some of the questions are:

Why has the transition to a demutualised Nairobi Stock Exchange dragged on for so long?

What happened to plans to introduce asset-backed securities?

Why is the procedure for approving a bond issue still too long, complicated and tiresome?

Why did commercial paper disappear from the market and why aren’t we seeing a booming and liquid market for unit trusts?

Why is the number of listed companies shrinking by the day?

When shall we reach the point where our local capital market has the capacity to handle a transaction as large as the Kenol/Kobil acquisition?

In a nutshell, what is stunting capital market development in Kenya?

I knew that as the CMA chief executive, Ms Kilonzo tackled some of these issues before in public forums. But I wanted more. I calculated that having just left office, she was now free to tell tales.

I have over the years learnt that changing policy or implementing economic reforms in Kenya is not just a technical matter. The explanation is in the “political economy” of the policy you are trying to issue.

In Kenya, being in office is not the same thing as wielding the clout and influence to deliver the desired changes. As the CEO of the Capital Markets Authority, you could be in office but not in power.

When you see reforms and critical decisions you are trying to implement being undermined or postponed, it simply means that the changes you are thinking about are not aligned with the interests of individuals, ethnic groups or institutions that wield real and effective power.

I wanted an insider’s account of the behind-the-scenes shenanigans surrounding the CMC saga. Was it all about a battle between competing ethnic interests and had ethnicity played a role in some of the decisions the CMA board had made recently?

Officially, Ms Kilonzo had announced that she was leaving office voluntarily to seek greener pastures.

But with the timing of her departure coming right in the middle of the CMC saga, it was inevitable that her exit would be interpreted in the context of the ethnic under-currents surrounding the saga.

Who should be the next CEO of the Capital Markets Authority? That job needs a heavy hitter who can marshal and command the clout and profile comparable to the status enjoyed by the Governor of the Central Bank.

The assignment can no longer be left to lawyer-accountant types, mere technicians who cannot see beyond sending rogue stockbrokers to jail. This body deserves a CEO who will put the accent on development. Today, capital is fleeing Europe and looking for a place in Africa.

Asian capital will soon want to discover Africa. What are we doing to prepare our markets for these global trends? Nothing. A deep and developed capital market is what will save ‘Wanjiku’ from the tyranny of commercial banks. This country must fly. Again.