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Daily Nation : February 4th 2014
30 | BUSINESS REGULATION |The changes to wait a new regime that will be put in place CBK to stay without chairman pending reforms, says Rotich The Treasury Cabinet Secretary says the appointment to the board will have to wait till changes are made BY MUTHOKI MUMO email@example.com T he Central Bank of Kenya will stay without a substantive board chairman until the government completes reforms to the regulatory regime that governs the banking sector. National Treasury Cabinet Secre- tary, Mr Henry Rotich, in an interview last week, said the appointment cannot be made until an on-going overhaul of the law governing the institution is complete, and the ensuing changes enacted by Parliament. “At the moment, we have an act- ing chairman because of the CBK law we are reviewing. After that, we will make the appointment of the chairman,” said Mr Rotich. The position of an independent chairman in the CBK board was created by Parliament through amendments to the Central Bank Act in 2012, following the historic currency depreciation in 2011 that saw the value of the local currency fall to exchange at Sh107 for one US dollar. The move was meant to dilute the powers of the governor who then also served as the chairperson of the CBK board. Following review of the Central Bank Act economist, Dr Mbui Wagacha, was last year elected to the post of chairperson of the CBK board in an acting capacity pending a formal presidential appointment. The proposed changes would also raise the number of directors from the current five to eight. However, the Central Bank board will not be reconstituted until the government completes an on-going overhaul of the Central Bank Act in- SALATON NJAU | NATION Treasury Cabinet Secretary Henry Rotich (right) and Ambassador of the Netherlands to Kenya Joost Reintjes during the signing of a grant agreement between the Government of Netherlands and Kenya at the Treasury Building in Nairobi yesterday. The Sh28 million will support the development phase and design of Kisii water supply and sanitation project from Bunyunyu dam. tended to introduce further reforms in the institution. Mr Rotich said a new law that will strengthen the Central Bank’s oversight role in the market will be introduced in the National Assembly before the end of the current financial year. According to the 2012 rules, the CBK governor was expected to retain his position as chief executive of the body responsible for management including staff appointments and dismissals. The chairperson of the board, ac- cording to the 2012 amendments, is to be appointed by the president through a competitive process and with the approval of Parliament. Both shall hold office for a maximum of two four-year terms. Until the new law is in place, acNEW LAW Why the need for fresh system The rising lending rates call for reforms to ensure borrowing is made easy The proposed changes would also raise the number of directors from the current five to eight. There was need to separate powers of those holding posts at the CBK from its board cording to Mr Rotich, Dr Wagacha will continue to be the acting chairperson of the Central Bank’s board. Apart from Prof Ndung’u and Dr Wagacha, other members of the CBK board are Ms Florence Muindi, Ms Vivienne Apopo, Dr William Ogara and Mr John Msafari. In past interviews, Mr Rotich indi- cated that the Central Bank Act needs to be harmonised with international standards and trends in the banking sector following numerous amendments over the last four decades. President Uhuru Kenyatta first alluded to the changes in the laws governing Central Bank last year amid growing concerns that the lending rates in the country have the potential to stifle economic growth. Diamond Trust eyes more share capital in cash call BY NATION REPORTER Diamond Trust Bank is looking to raise new capital this year with the sale of an additional 22 million shares through a rights issue. The company, in a statement yesterday, said it will hold an extra-ordinary general meeting next month during which shareholders are expected to approve the creation and sale of the new stake which, if fully subscribed, will raise the bank’s authorised share capital to Sh1.2 billion. The meeting, scheduled for March 4, will see owners approve the cash call, paving the way for directors to seek the necessary approvals from the regulators. Among other things, the meeting is expected to resolve that “the directors be and are hereby authorised to obtain all the required consents and authorisations, including any approval required from the Capital Market Authority (CMA) and to generally do and effect all acts and things required to give effect to the above resolutions,” said Mr Stephen Kodumbe, the bank’s company secretary in the statement. DTB, with operations in Kenya, Uganda, Tan- zania and Burundi, last year made another rights issue which was oversubscribed by 86.2 per cent, raising Sh3.36 billion. Upon approval by shareholders and regulators, the bank will join National Bank, the Kenya Electricity Generating Company (KenGen) and Uchumi Supermarkets in the list of companies that have lined up rights issues this year. SPONSORSHIP New initiative to train business journalists American business magnate Michael Bloomberg yesterday launched an initiative to train business and financial journalists in Africa. The Bloomberg Africa media initiative will provide skills and programmes for scribes and convene annual forums to explore best practices in media. “More and well-trained journalists serve the public interest enabling the media to provide fuller coverage of key development issues,” said Nation Media Group CEO, Mr Linus Gitahi, in a statement. REMITTANCE Kenya to host parley on diaspora inflows Kenya has been selected to host the first African Institute for Remittances meeting meant to strategise on how to enhance diaspora inflows into the continent. The African Union executive council chose the country and asked the World Bank and other development partners to support the institute. Kenya is among four countries that had earlier expressed interest in hosting the AIR secretariat. Others were Djibouti, Egypt and Mauritius. DAILY NATION Tuesday February 4, 2014 A DECADE LATER, FACEBOOK COPES WITH CHALLENGES Analysts says social site’s success could be its undoing. P.32 BRIEFLY RESULTS Eveready profit down 35 per cent Eveready East Africa has re- ported a 35 per cent fall in after tax profit for the year through September 2013. The company’s earnings dropped to Sh45 million, compared to Sh70 million recorded the previous year. In a statement, the firm’s management blamed this on a massive foreign exchange loss incurred in the period. “The company incurred an un-realised foreign exchange loss of Sh13 million compared to an un-realised gain of Sh51 million in 2012,” it said. MOTORING Actis invests in local car parts distributor Global emerging market inves- tor Actis has announced a 36 per cent equity investment in AutoXpress group, a leading tyre distributor in the region. The move is part of the company’s strategy to expand its footprint in the region. “AutoXpress is a compelling entrepreneurial business that meets a core consumer need, access to quality tyres, automotive parts and services in convenient locations,” said Mr Peter Schmid, head of private equity at Actis.
February 3rd 2014
February 5th 2014