Markets regulator’s dividend to Treasury drops as expenses increase

The Capital Markets Authority’s dividend to Treasury is expected to drop by 18 per cent due to increased expenses and new projects including the installation of a computer and security system.

Financial statements tabled in Parliament last week show that the market regulator is expecting to pay Sh63.8 million to Treasury for the period ended June last year compared to the Sh77.6 million it paid for the period ended June 2010.

“Included in the calculation of the transfer to Treasury is a commitment done for the purchase and installation of a computer exchange server and enhancement of the security system at a total cost of Sh10.09 million,” said the CMA in the financial statements audited by the Kenya National Audit Office.

CMA’s after-tax surplus for the year dropped by 29 per cent to Sh86.07 million as provision for doubtful debts rose by almost nine times to Sh49.3 million. The market regulator’s employee expenses rose by 25 per cent to Sh222.3 million from Sh178.4 million the previous year as it added employees to a tally of 65 to help in market surveillance.

In June last year, Stella Kilonzo, CMA chief executive officer, said that the authority would continue to recruit for various positions in response to increasing market vibrancy and following detailed skills gap analysis for core departments. In its annual report for the period ended June 2010, employee costs had jumped by Sh66.8 million to from Sh111.5 million as at June 2009 as the authority filled eight vacant positions, increasing the total number of staff to 60 from 53 as at June 2009.

Training and conference expenses rose by Sh6.2 million while authority member’s emoluments and other allowances dropped by 10 per cent to Sh14.4 million.

CMA’s fee income rose by Sh90.2 million to Sh474.6 million mainly due to transaction fees from the Nairobi Securities Exchange (NSE) that jumped by 51 per cent to Sh234.5 million buoyed by increased turnover in the second half of 2010.

According to data from the NSE the volume of shares traded had risen by 1.25 times in the second half of 2010 as compared to the second half of 2009, while share prices were on an upward trend.

The market regulator makes 0.12 and 0.0015 per cent of the value of each equity and bond transaction respectively at the Nairobi bourse.

The authority’s other income fell to Sh90.3 million from Sh100.9 million as of June 2010 as donor funding dropped by 35 per cent to Sh29.4 million.