Kenya: new appointments at EAPCC

Former Capital Markets Authority (CMA) chairman, Kung’ Gatabaki, has joined the East African Portland Cement (EAPCC) board as one of two new directors nominated by the global conglomerate Lafarge, stepping into the shoes of former Kenya Airways CEO, Titus Naikuni, who held the position for eight years. Prof Sarone ole Sena, the chairman of the Eldoret University Council, has also joined the EAPCC board. The two new directors were appointed in a special board meeting.

Mr Gatabaki, who served as CMA chairman from June 2011 to May this year, is joining the board of a company which he is all too familiar with. He was the chairman of the regulatory body when EAPCC shares were suspended from trading at the Nairobi Securities Exchange (NSE) in 2012 following allegations of corporate malpractice. In December 2013 EAPCC management took the regulator to court seeking to lift a suspension of its annual general meeting resolutions following a complaint by government.

The new board members will be expected to help reverse EAPCC fortunes. Earnings have been hurt by stiff price competition, high staff costs and the weakening shilling. The firm’s administrative costs in the year increased by KES700 million following a restructuring of its management, staff compensation and an increase in staff gratuity. In the year ended 30 June, the company reported a net loss of KES386m against a net profit of KES1.7bn in June 2013. “The two new independent directors nominated by Lafarge bring with them a wealth of experience from the corporate world,”APCC said in a statement.

EAPCC’ performance has also been affected by a protracted power battle between the three main shareholders of the company. Lafarge, which owns 41.7 per cent of EAPCC, also owns a 58.6 per cent stake in rival Bamburi, which is also Kenya’s biggest cement producer. The government argues that Lafarge’s sizeable shareholding in Bamburi and Portland gives it more than half of Kenya’s cement market and amounts to monopolistic behaviour and undue concentration of economic power. Lafarge has protested this interpretation. Another point of contention has been the assertion by government that the combined stake of the Treasury and NSSF gives it majority control of the firm.