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Lenders top best managed NSE firms

By Otiato Guguyu | February 8th 2019

Banks dominated the list of the best run listed companies, according to the latest ranking by the market regulator.

According to the Capital Markets Authority (CMA), the top three listed firms leading in corporate governance where the board of directors and managers played their roles in safeguarding investors’ interests were lenders.

Safaricom, which controls half of the market by capitalisation at Sh1 trillion, was however missing from the list of top firms in corporate governance.

“We note that three issuers in leadership were from the banking sector. The five issuers in good rating comprised of two from banking, two from commercial and services and one from the manufacturing and allied sectors,” said CMA.

The 11 listed banks and Safaricom, the only telecommunication firm, control a huge chunk of the market at the Nairobi Securities Exchange (NSE) where investor wealth needs to be assured.

There are 62 listed companies and five issuers of corporate bonds, making a total 67 issuers.

Most issuers were on a fair rating, with 17 assessed as being in need of improvement.

The NSE corporate governance scorecard comes at a time when investors have lost significant wealth as a result of the suspension of Athi River Mining and Deacons, which became insolvent last year.

Investors in bonds have also suffered from the collapse of Imperial Bank and Chase Bank, whose bonds were listed at the NSE.

NSE has also faced de-listings after Express Kenya, Unga Group and now KenolKobil all sought to buy out majority shareholders and exit the market.

The code is supposed to give a boost of confidence to the securities market that has seen a decline in performance and a net outflow of cash by foreign investors over the last two years.

The report noted that the banking sector needed improvement in stakeholder relations, accountability, risk management and internal control and transparency. The sector also needs to do more on disclosure principles.

The energy and petroleum sector, CMA said, needed improvement in commitment to good corporate governance and stakeholder relations.

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