Former CMA chief Ntalami dies at 67

The story of Edward Ntalami, a former Capital Markets Authority (CMA) chief executive who died last week at 67 has two extremes.

On the one hand, several stockbrokers collapsed due to problems that started in his era at the helm of the regulator while, on the other hand, he presided over a bullish market whose peak numbers have not been surpassed.

It emerged in investigations that the spectacular collapse of Nyagah Stockbrokers in 2008 was a result of events that began by 2005. Mr Ntalami avoided having to personally deal with the actual collapse of Nyagah because he had left the CMA in December 2007.

In the collapse, thousands of investors who had deposited cash with the stockbroker suddenly found themselves struggling with what to do next.

This was because the CMA could only refund up to Sh50,000 to each investor regardless of how much the broker had held. Rich investors, in particular, lost Sh500 million because of the limit imposed by the law.

The corporate governance challenge was all the more troubling because it had followed another: the Francis Thuo & Partners that came apart in March 2007. Again the seeds of the collapse had been sown over time.

While Mr Ntalami played no direct role in the collapses and was not accused of having knowingly let poor management continue, he was nevertheless in charge of the only body that had responsibility for the welfare of investors.

The matter of the payment to investors who had lost money is yet to be completely settled with some having failed to collect their cash despite being invited by the CMA to do so.

But on the other extreme he had overseen a market that was in solid upward movement. Solid economic growth that reached a two-decade high of seven per cent in 2007, the same year that he left the CMA, also saw corporate profitability rise. And with this was a market that saw stock prices soaring.

In 2002, the economy grew by a mere 0.5 per cent, but this rose to 3.0 per cent in 2003 and by 2006, the economy was growing by more than six per cent. It was 2006 in that the 20-share index rose to its highest level ever of 6,161 points — a level that has not been hit again.

Perhaps supervising an ever-rising securities market with little signs of trouble, Mr Ntalami did not feel the need to make the rules to improve corporate governance. Not until towards the end of his era, did trouble begin to show.

It would be left to others who followed to begin the painful exercise of making what some have now come to consider stringent laws intended for better functioning and supervision of the market.

Some players in the market, however, say that the idea of Financial Services Authority was mooted by Mr Ntalami, along with others in the market, but it never came to fruition.

The FSA was intended to bring together the various financial sector players including the CMA and the Central Bank of Kenya, but the form it would take was never solidified or put into a Bill as is currently being done.

A Bill is now understood to be in the drafting stage, with a view to finally give a legal expression to an idea that has been in the pipeline for too long.

“He did not follow up on the FSA idea even though he proposed it. Unfortunately, he never consulted other market players when making big decisions. The idea did not get anywhere,” said Andrew Franklin, who used to run investment advisory firm Franklin Management Consultants until early this year.

Perhaps, the point was that Mr Ntalami was not a great talker even to the media. For purposes of being covered by the press, he spoke only when he had to and not as a matter of routine.

He was not completely averse to conversations with the media on developments in the market, but he remained largely aloof and shunned controversy.

He hailed from Meru County’s Kianjai village, an area that is about 20 or so kilometres east of Meru town on the highway to Maua town.