CMA Chairman James Ndegwa Announces His Exit, Ending An Era Of Wrangles -

CMA Chairman James Ndegwa Announces His Exit, Ending An Era Of Wrangles

James Ndegwa
James Ndegwa. [PHOTO/ COURTESY]

The Capital Markets Authority (CMA) chairman James Ndegwa will exit the authority this month, ending an arguably chaotic tenure of six years.

Ndegwa announced his exit on Tuesday during a a closed virtual CMA forum.

“This is my last week as the chairman of the authority’s board. It has been a great honour to serve in this position for two terms and to work with all the various stakeholders in the capital markets industry, our peer regulators, my colleagues on the board and the highly committed team at the authority,” he said.

During his tenure, Ndegwa has been in fight with stakeholders and market players who accused him of conflict of interest, since he is a market player.

In January 2020, activist Okiya Omtata filed a petition in the High Court seeking to oust the CMA board led by Ndegwa over irregular and unconstitutional appointments that entail conflict of interest.

In the petition filed by Omtatah, Ndegwa was accused of being a player in a market that he regulates, which amounts to conflict of interest to the “extent that he is a public official who regulates his private businesses”.

Ndegwa is the Chairman of First Chartered Securities (FCS). FCS owns ICEA Lion, which owns ICEA Lion Asset Managers, which manages the ICEA Money Market Fund, which is regulated by the CMA.

Read: Court Faults CMA For Sanctioning Cytonn, Gives 30-day Moratorium

ICEA Lion recently acquired Stanlib, hence, Stanlib Money Market Fund is also under ICEA lion. Stanlib Money Market Fund is regulated by CMA. FCS and it’s afflictions own a 12 percent stake in NCBA, which is listed in the Nairobi Securities Exchange. Hence, NCBA is also regulated by CMA.

NCBA also runs NCBA money market fund, which is also regulated by CMA.

The Ndegwa family also owns a controlling 50.9 percent stake in the Unga Group which is also listed with the Nairobi Securities Exchange (NSE).

Ndegwa was re-appointed to be the Chairperson of the Board of CMA, for a period of three years with effect from April 18, 2018.

“Initially, H. E. the President handpicked and appointed him to the public office without subjecting him to a transparent, competitive, inclusive, and merit-based recruitment process open to public participation,” argued Omtatah.

Read: James Ndegwa Fights To Retain Control of CMA After Ouster Petition Got Nod

During his reign, Mr Ndegwa has expanded his capital markets business interests by acquiring fund management business, money market funds, and acquiring another bank.

The expansion happened under the watch of Paul Muthaura as CEO of CMA, and it is curious that following his exit from CMA, he was recently offered employment CEO of ICEA Lion General Insurance.

CMA has enacted and enforced policies that are very friendly to banks and are very unfriendly to competing non-bank players, this has led to banks controling the business funding market making it very difficult for businesses to get loans at reasonable prices.

Market players have recently been aggressively pushing for the freeing of the Capital Markets governance and operations from the control of the banking sector.

In fact, in the latest Capital Markets Soundness Report, CMA acknowledged that “Current construction finance by capital markets stands at 5% with the banking sector taking up the lion’s share of 95% according to the Africa Housing Finance Yearbook 2020. Therefore, there is potential for the capital markets to bridge the gap and be a source of cheap capital to spur the real estate and construction sector in 2021 and beyond.”

In well-functioning economies, capital markets provide 60% funding with banks providing only 40%, hence there is need to urgently review the capital market frameworks to spur funding for the economy and businesses.

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