National Social Security Fund (NSSF) Managing Trustee David Koross. PHOTO/NSSF.
By BUSINESS REPORTER
newshub@eyewitness.africa
The quiet and controversial sale of the National Social Security Fund’s (NSSF) 27% stake in East African Portland Cement (EAPC) to Kalahari Cement Limited has sparked mounting suspicion of insider dealings, asset undervaluation, and a lack of transparency.
The deal, which involved the transfer of 24.3 million shares to Kalahari Cement, a subsidiary of Amsons Group, has raised serious concerns about whether due process was followed and whether the public’s interests were adequately protected.
The deal, valued at KSh1.6 billion, has become the focal point of an ongoing legal battle, with the Consumer Federation of Kenya (COFEK) seeking to halt the transaction. COFEK has moved to the High Court, filing for urgent conservatory orders to stop the acquisition, citing violations of constitutional rights and significant gaps in regulatory compliance.
The lobby group argues that the transaction was executed without full public disclosure or adherence to the relevant legal frameworks, including the Capital Markets Act, the Competition Act, and the Public Finance Management Act.
“The sale and transfer of NSSF shares to Kalahari Cement Limited may be completed imminently, resulting in irreversible consolidation of ownership and control, which will undermine public leverage and make the petition academic and nugatory,” COFEK said in its court documents.
The sale follows Kalahari’s previous acquisition of 29.2% of EAPC from other shareholders, bringing the company’s total shareholding to a commanding 68.7%. Once the deal is finalised, Kalahari Cement and its affiliates will control a significant majority of EAPC, raising concerns about the concentration of ownership and control in a key national asset.
The secrecy surrounding the sale has prompted questions about the process, the valuation of the shares, and the interests behind the deal. COFEK has since raised alarms over the lack of public disclosure, competitive bidding, or transparency in the handling of this high-stakes transaction.
The deal appears to have been fast-tracked, with few people privy to the details or involved in the decision-making process. The lack of a competitive bidding process and the speed at which the sale has moved forward have raised further questions about who authorised the divestiture and why it was kept out of the public eye.
COFEK’s petition, filed at the Milimani Constitutional and Human Rights Division, claims that the Capital Markets Authority (CMA), the Competition Authority of Kenya (CAK), the NSSF, and other involved parties have failed in their duty to ensure regulatory compliance and transparency in the transaction.
The federation argues that this failure undermines the public’s right to access information and threatens key constitutional protections, including property rights, fair administrative action, and the right to a fair hearing.
At the heart of the petition is the claim that the sale not only flouts legal and regulatory requirements but also jeopardises consumer protection and market competition. COFEK contends that the transaction could result in the creation of a dominant, if not monopolistic, market player, given Kalahari’s expanding stake in EAPC.
This could lead to anti-competitive practices and undermine the principles of fair competition in the cement sector. The petitioners are seeking a range of court orders, including a freeze on the transfer, consolidation, or exercise of voting rights linked to the disputed shares.
They are also calling for the Capital Markets Authority to conduct a thorough inquiry into the sale’s compliance with regulatory standards, and for the Competition Authority to assess the merger’s potential effects on competition and market dominance.
In their filing, COFEK specifically highlights the potential risks posed by Kalahari’s growing influence over EAPC. Once the transaction is concluded, the Tanzanian-owned company and its parent group, Amsons Group, will hold effective control over EAPC, a strategically important Kenyan company with historical ties to the state.
This level of foreign control or influence could have far-reaching consequences for Kenya’s cement industry, particularly given the national importance of EAPC as a producer of essential building materials.
Tanzanian tycoon, Edhah Abdallah Munif, who is the owner of Kalahari Cement. PHOTO/UGC.
Kalahari Cement is owned by Tanzanian tycoon Edhah Abdallah Munif, who has a history of making significant investments in East Africa. Munif’s involvement in the cement industry, particularly in Kenya, has raised concerns about the extent of foreign control in a sector that is seen as crucial to Kenya’s infrastructure and development.
While the acquisition by Kalahari has been touted as part of a wider effort to enhance efficiency and competitiveness in the industry, critics argue that the transaction lacks the necessary scrutiny and public accountability.
EAPC, once a key state-owned enterprise, has undergone significant privatisation over the years. However, the company remains an important national asset, and its majority control by a foreign entity raises questions about the long-term implications for the local economy and the interests of Kenyan consumers.
The cement sector in Kenya has been facing increasing pressure in recent years due to rising competition, input costs, and regulatory challenges. However, the entry of Kalahari Cement as a dominant player in the market could exacerbate these pressures, potentially stifling competition and leading to higher prices for consumers.
This is especially concerning given the critical role that cement plays in the construction and infrastructure sectors, which are vital to Kenya’s economic growth. Additionally, the consolidation of ownership in EAPC could lead to reduced accountability and transparency in the management of the company, with Kalahari’s growing control potentially diminishing the influence of local stakeholders and workers.
The NSSF, as a key shareholder, has a responsibility to protect the interests of contributors to the pension scheme, but questions remain about whether the sale adequately reflects the value of the asset and whether due diligence was conducted in the best interests of workers’ retirement savings.
The case has highlighted broader concerns about the governance and accountability of state-owned assets and publicly-listed companies in Kenya. The lack of transparency surrounding the sale of NSSF’s shares in EAPC is a stark reminder of the need for stronger regulatory oversight and more robust mechanisms to ensure that public assets are managed in a way that serves the best interests of the people.
In particular, the transaction has raised alarms about the adequacy of Kenya’s regulatory framework in dealing with such significant corporate transactions.
The failure to ensure proper public disclosure and compliance with key laws has left many questioning whether the country’s capital markets are truly serving the public good, or whether they are being manipulated by powerful interests with little regard for the broader economic or social consequences.
As the legal battle continues, it remains to be seen whether the courts will intervene to halt the sale of NSSF’s shares to Kalahari. However, the case has already shone a spotlight on critical issues related to
transparency, accountability, and the management of public assets.
The outcome of this case will have significant implications for Kenya’s corporate governance practices, particularly in terms of how state-owned assets are managed and sold.
It is crucial that the government, regulatory bodies, and private sector actors’ work together to ensure that future transactions are carried out in full compliance with the law and in a manner that prioritises public interests.
For now, the questions raised by COFEK and other critics remain unresolved. The sale of NSSF’s shares in EAPC has become a flashpoint in the ongoing debate over corporate governance, market competition, and the role of foreign investment in Kenya’s economy.
