Troubled Nairobi bourse-listed firms roil region’s stockmarkets

The collapse of yet another Nairobi Securities Exchange-listed company has spooked investors in East Africa’s stock markets, raising fears of possible cross-border contagion.

Mumias Sugar Company, for many decades Kenya’s biggest miller, was placed under statutory management last week for defaulting on debts estimated at more than Ksh12.5 billion ($125 million).

This follows a series of company failures that have rocked the region’s largest bourse, dampening investor interest in the regional stock markets.

NSE, which has 66 listed firms, has fallen victim to a growing number of financially distressed firms of which three have been put under receivership in a span of less than two years.

Loss making and debt-ridden cement maker ARM and fashions retailer Deacons (EA) were put under administration last year.

Besides, several NSE-listed companies including Kenya Airways, Uchumi Supermarkets, Express Kenya, Sameer Africa, National Bank of Kenya, Eveready East Africa, East African Portland Cement, Sasini, Kenya Power, Transcentury, East African Cables and Home Afrika are facing a cocktail of corporate governance and financial challenges.

CRISIS

The crisis facing the Kenyan bourse is sending shivers into other regional markets, with fears of further dampening investor interest in markets that are struggling to attract new capital through new listings.

“To tell you the truth I’m worried. A section of investors will feel bad and will not come back to the market. They will be scared. This trend is not good for the markets. Something needs to be done across the board,” Rwanda Stock Exchange (RSE) Chief Executive Celestin Rwabukumba told The EastAfrican.

“I have been looking at this trend and asking what is happening. We need to increase scrutiny on these companies to ensure there is proper systems, corporate governance and accountability in place. The shareholders of these companies should also put the management in check. It is about internal controls.”According to Mr Rwabukumba, the solution lies in enforcement of market regulations.“The regulations which are there are not bad the problem could be the enforcement,” he said.

DIFFICULT TIMES

In Tanzania, the long-running battle between the government and Acacia Mining Plc over a tax dispute has frightened potential investors.In 2017 the Tanzanian government slapped a $190 billion tax bill on the company for under-declaring exports. The government also banned industry exports of unprocessed metal in a move set to hit the company hard.Last week, after completion of its buyout by its parent firm Barrick Gold Corp, the company was delisted from the […]

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