What Paul Muthaura delivered as CMA Chief

Mr Paul Muthaura
Mr Paul Muthaura was at the helm of CMA for more than seven years. PHOTO | SALATON NJAU | NMG 

After slightly more than seven years at the helm of the Capital Markets Authority (CMA), a soft-spoken Paul Muthaura has exited, leaving behind a mixed legacy.

Mr Muthaura had the option of seeking another term at the three-decade old regulator but opted out at a time the CMA is half-way in implementing its 2014-2023 master plan. The to-do list at the CMA is as long as what has already been accomplished.

He exits with market oversight lapses on the lips of many capital market players. This is especially in the wake of incidents of insider trading and market manipulation in transactions such as the takeover of KenolKobil by French major Rubis Energie.

For the past seven years and seven months he served as the CEO, it has been a roller-coaster ride in making key decisions in rolling out new products to deepen the Sh2.5 trillion Nairobi Securities Exchange but also cut malpractice.

But it has come with its own challenges. In a recent interview with NTV, Mr Muthaura said it has not been easy for the regulator to flex its muscles on those who go against the CMA Act and the rules that govern the conduct of listed firms.


“We have tried to be a very proactive entity but we faced undue challenges from delays in court system. That has translated to the level of confidence we have seen in the market,” said Mr Muthaura.

His successor is expected to have a fairly easier time with courts after the CMA powers were broadened to include enforcing penalties and sanctions. This had been challenged before.

Mr Muthaura has served the CMA in other roles such as acting manager for legal affairs (2008), senior legal officer for regulatory framework (2005 –2008) and director of regulatory policy and strategy between November 2011 and June 2012.

He has been instrumental in positioning the CMA in the regional and global capital markets through enhancing regulatory and legal framework and expanding the scope of capital markets products.

During his tenure as the chief executive, the CMA has been feted as the most innovative capital markets regulator in Africa four years in row, from 2015 to 2018.

Products such as the Growth Enterprise Market Segment (Gems), Gold Exchange Traded Funds, Ibuka programme and the derivatives market have all come to the NSE under Mr Muthaura’s watch. However, the uptake has not been promising.

He also exits at a time the Nairobi bourse has endured five years without initial public listing (IPO) and with corporate bond market waning. Since 2014, NSE has only seen listings by introduction, mostly from small firms.

Major IPOs such as KenGen and Eveready (2006), Safaricom and Co-operative Bank (2008) and British American Tobacco in 2011 were before he took charge.

It has also been during his tenure as CEO that many delistings have occurred. Access Kenya, Rea Vipingo, Marshall East Africa, Hutchings Biemer, A. Baumann and KenolKobil have all exited.

Tied to this have been lapses such as the controversial exit of Atlas Development and Support Services, leaving investors bitter.

Deacons East Africa, ARM Cement and Mumias Sugar have all sunk into administration while Uchumi Supermarkets has not published its financials since June 2018.

The incoming CEO will have to defend the interests of investors especially those who put money in bonds. This may require close co-operation with other regulators such as the Central Bank of Kenya.

The collapse of Imperial Bank and Chase Bank exposed the weaknesses in investor protection after it emerged that bond holder preferences were not considered before selling the two banks.

The CMA has been calling for law change to protect bondholders but until then, the momentum of bond market has reduced. Only three bonds — Stanbic, East African Breweries and Family Bank will be left in the market after August 2020.

Despite exiting the CMA and keeping his next move a secret, his role in the capital markets looks sets to continue. He is serving as the chairman of the Consultative Committee of the East African Securities Regulatory Authorities (EASRA).


He has, since September 2014, been an elected board member of the International Organisation of Securities Commissions (IOSCO). He is the chairman of the Africa and Middle East Regional Committee of IOSCO, a four-year role that runs to May 2020.

The replacement process for Mr Muthaura started in September last year but has dragged, prompting the board to pick Wyckliffe Shamiah — a CMA insider — as acting CEO.

The delay is a repeat of what happened in 2012 when the then CEO Stella Kilonzo left office without a successor, after serving for four years.

The board is supposed to interview candidates and recommend the successful applicant to the Cabinet Secretary for National Treasury and Planning. The CS appoints and gazettes the replacement.