[2008-11-20]  Transition at NSE as Mwebesa quits
The Nairobi Stock Exchange chief executive Chris Mwebesa has resigned just four months after his three-year contract was renewed, throwing the bourse into a transition mode.

The departure comes at a difficult time for the exchange, which this week recorded its first undersubscribed initial public offering since 2005, has seen Sh442.3 billion wiped off its total market capitalization since June, and has seen three stock brokerages either fail or move into enforced management in the past 20 months.

It was not clear why Mr Mwebesa, who has been CEO of the bourse for three and half years was leaving, nor why he had chosen this time to do so.
Nairobi Stock Exchange (NSE) chairman James Wangunyu said the board of directors had accepted Mr Mwebesa’s resignation and that a search for his replacement was on.

Mr Mwebesa tendered his resignation last month, just four months into his new contract which was due to expire in June 2011.

His stay in office nearly three weeks after he resigned is being seen as a frantic effort by the NSE board to avoid a leadership vacuum at such a critical moment in the history of the bourse.

Mr Wangunyu said the board had covered good ground in the search for a replacement who could be named as early as today.

“Recruitment of a new CEO is at an advanced stage and we could make the announcement tomorrow (today) after a board meeting,” said Mr Wangunyu.

Sources indicated that Mr Mwebesa is headed for a lucrative job in a local investment bank with a regional branch network.

There are three local investment banks with a regional footprint; CFC Stanbic Financial Services, African Alliance and Dyer and Blair.

Mr Wangunyu declined to reveal the shortlist of top contenders for the CEO’s post, but said the board would be looking for individuals with sound knowledge of local capital markets.

“We are looking for someone with an in-depth knowledge of the stock market and one who can drive the reform agenda and forge a good working relationship with the Capital Markets Authority,” said Mr Wangunyu, adding that the individual would be expected to oversee ongoing demutualisation of the NSE, integration with other East African bourses and other reforms.

Mr Wangunyu said the board was more likely to go for a market insider with a strong personality to enforce discipline and maintain NSE’s position as a leading stock exchange in Africa.


Mr James Wangunyu“The board began a search for the new CEO last month upon receiving Mr Mwebesa’s resignation, and interviews for his successor have been going on since then,” he said.


Legal background
Market players heavily tipped former Central Depository and Settlements Corporation (CDSC) chief executive, Mr Peter Waiyaki, to replace Mr Mwebesa, citing his experience and legal background as a perfect fit for Mr Wangunyu’s description of a suitable successor.

Mr Waiyaki did not deny being a possible contender for the job, but declined to comment further. Mr Waiyaki quit his job as the first CDSC chief executive last year to join Mboya and Wangong’u Advocates, where he is a partner.

He has however maintained contact with market players and is believed to have the support of a section of the stock brokers who view him as having the right credentials to institute reforms at the stock market.

Another possible successor is the current Rwanda Capital Market Advisory Council and Stock Market chief executive, Mr Robert Mathu, a pioneer employee of the NSE with a deep understanding of the capital markets.

Mr Mathu moved from the NSE to help found the Dar es Salaam Stock Exchange and the Uganda Securities Exchange before moving to his current position.

He has also worked as the managing director of a local investment bank.

Mr Mathu, who is based in Kigali, could not immediately be reached for comment.

The number of Kenyans holding investment accounts at the bourse has soared to an estimated 1.5 million while market capitalization remains close to Sh1 trillion, making the stock market one of the more visible economic sectors.

The renewal of Mr Mwebesa’s contract in June ended months of speculation over the position since his contract had expired five months earlier in February, and came barely days after the exit of immediate former NSE chairman, Mr Jimnah Mbaru, who was replaced by Mr Wangunyu.

“My priority is to oversee demutualisation of the stock exchange in the next 12 months and to work on re-building NSE’s public image,” said Mr Mwebesa in an exclusive interview with Business Daily after his re-appointment.

Mr Mwebesa was first appointed NSE CEO in 2005, and presided over the bourse’s highest growth period in its 53-year history, making it currently the biggest stock exchange in the region and the 5th largest in Africa in terms of market capitalization.

He however leaves at a time when investor confidence at the stock market is at an all time low, with the bourse about to record its first IPO under subscription since the famed KenGen offering that attracted investors to the stock market in their droves.

It was also during Mr Mwebesa’s tenure that one stockbroker, Francis Thuo and Partners went under with an estimated Sh140 million of investor funds, while Nyaga Stockbrokers, believed to have been the biggest retail stockbroker, was placed under statutory management.

Investor claims against Nyaga are estimated at close to one billion shillings.






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