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The East African : December 23rd 2013
56 DECEMBER 21-27,2013 BUSINESS, MARKETS AND FINANCIAL ANALYSIS THE MARKET WHISPERER EQUITY MARKETS (WEEKLY CHANGE IN BENCHMARK INDEX) NSE 20 Share Index Kenya 4,951.06 0.76% (CUMULATIVE MOVEMENT) DSE All Share Index Tanzania 1,835.17 -0.64% USE All Share Index Uganda 1,493.00 -1.19% RSE All Share Index Rwanda 138.35 -0.41% JSE All Share Index South Africa 44,489.86 2.24% NGSE All Share Index 39,625.42 Nigeria - 1.86% In the cement a≥ena, it’s the state vs Lafa≥ge W ill the Kenyan government force French con- glomerate Larfarge to sell off its stake at East Africa Portland Cement Company (EAPCC) in order to gain control of the Athi River based firm? Analysts believe that the state, which owns 25 per cent of EAPCC, could once again pull the antitrust trump card to edge out the French company that has outsmarted and outmuscled the government to dominate the EAPCC boardroom. Despite teaming up with the National Social Security Fund (NSSF) to jointly command 52 per cent of the cement firm, the government has played second fiddle in running EAPCC. Lafarge is represented on the EAPCC board by Kenya Airways chief executive Titus Naikuni, and Didier Tressarieu, former managing director of Bamburi Cement Kenya. The government has two seats: Kamau Thugge (PS, National Treasury) and Wilson Songa (PS Industrialisation). NSSF has one seat. Managing director Kephar Tande and chairman Mark ole Karbolo lean towards Lafarge, giving the French firm a majority of four directors to the gov- East African Portland Cement Company (EAPCC) chairman Mark ole Karbolo (left) and managing director Kepher Tande during the release of the company’s full year report in October. Lafarge owns 41 per cent of EAPCC. Picture: File The government has played second fiddle in running EAPCC ernment’s three. In addition, team Lafarge prefers to push its agenda at AGMs by a show of hands, much to the chagrin of the state and NSSF which has always demanded a ballot. A push to amend EAPCC’s articles of association to have the board expanded to 11, and filled on the strength of shareholding came to nought because the state and NSSF filed the notice after the due date. They now require an extraordinary general meeting to push the amendments through. However, the government side lacks the requisite 75 per cent vote needed to amend the com- pany articles of association. The state is now contemplat- ing reporting Lafarge to the Competition Authority of Kenya, saying its cross ownership of cement firms in the country is in breach of anti-competition rules. Lafarge holds majority shareholding in Bamburi Cement — 58.6 per cent — and 41 per cent at Portland Cement. The French group also has a controlling share in Hima and Tororo cement companies in Uganda. This will not be the first time the government is using the antitrust law strategy to contain Lafarge. In 2006, Peter Njoroge, the Commissioner of Monopolies, wrote to then Finance Minister David Mwiraria asking him to get Lafarge to dispose of its shares in both EAPCC and Athi River Mining on the grounds of monopolistic behaviour and concentration of economic power. The ensuing political pres- sure saw the French firm dispose of its 15 per cent stake in ARM Cement in 2010. For now, the government has written a terse letter to the markets regulator questioning the veracity of EAPCC’s books of account, as well as the conduct of its four directors. Bank of Ba≥oda st≥ike: Time fo≥ a new sta≠ st≥ategy? THE STAFF strike at Bank of Baroda Uganda last week caught its management unawares, and also took the industry lobby and regulator by surprise. The strike involved some 100 local employees agitating for a 20 per cent pay rise granted by Baroda’s Indian parent institution two years ago, which is yet to be implemented. The industrial action exposed Bank of Baroda’s conservative labour policies and focus on mainstream challenges such as insider fraud and legislative reforms. Baroda is the only lender that has maintained past bargaining arrangements with local trade unions; a source of mayhem for major banks that lost hundreds of millions in legal suits filed by labour groups in the early 90s. Consequently, big lenders opted out of collec- tive labour bargaining arrangements, preferring individual employment contracts that have exploited many junior employees while benefitting experienced senior managers. Whereas striking staff agreed to resume work on Wednesday, their leaders gave a three-day ul- timatum to the bank to resolve their grievances, with another meeting between management, union representatives and workers scheduled for some time before Saturday. The strike largely affected operations at head- quarters, and its 15 branches experienced marked slowdown in operations during the period of industrial action. It also highlighted growing dissatisfaction among junior employees within the industry, particularly those working for smaller banks that offer lower salaries and fewer benefits. Published at Nation Centre, Kimathi Street, and Printed at Mombasa Road, Nairobi by Nation Media Group, Box 49010, GPO Nairobi, 00100. Registered at the GPO as a newspaper. Nairobi Office, Tel: 3288000, 211448, 337710, Fax 214531, 213936. Dar es Salaam Office. Tel: 2119657/8. Kampala Office, Tel: 232771, 232772. Fax 232781 Download free QR Readers from the web and scan this QR (Quick Response) code with your smart phone for pictures, videos and more stories Tanzania inte≥est ≥ates d≥op COMMERCIAL INTEREST rates in Tanzania are under pressure. The country’s average lending rates for the quarter ending September averaged 13.56 per cent, a drop from the 14.36 per cent recorded in the previous quarter and 14.45 per cent recorded in the corresponding quarter in 2012. In addition, the country’s 12- month deposit rate decreased to an average of 11.14 per cent from 11.37 per cent in the preceding quarter and 11.72 per cent recorded in the quarter ending September 2012. The development is good news for depositors and government economic policy makers who are pushing for increased private sector lending to spur the economy. Even though the country’s in- terest rates have dropped, year on year credit growth to the private sector has picked up by 15.1 per cent in the year ending September 2013, compared with 16.1 per cent recorded in the corresponding period in 2012.
December 16th 2013
December 30th 2013