NAIROBI, Kenya, Mar 26 – The National Assembly’s Finance and National Planning Committee has demanded scrutiny over the Sh2 billion loss incurred by the National Social Security Fund (NSSF), summoning the Capital Markets Authority (CMA) to explain its failure to act on irregular bond transactions flagged by regulators.
The issue, first raised by Auditor General Nancy Gathungu, has exposed potential regulatory lapses in the oversight of listed securities, with lawmakers demanding accountability from both the CMA and the Central Bank of Kenya (CBK).
CBK Governor Kamau Thugge revealed that the apex bank had alerted CMA about the irregular bond dealings involving NSSF and two other entities as early as August last year.
He stated that CBK formally wrote to the regulator on August 1 and 19, providing detailed information on the transactions conducted between May and July.
“We are the ones who informed the CMA. We wrote to them on August 1 and August 19, providing all the information we had regarding the training and transactions conducted by NSSF and two other entities. You may want to ask why they have not acted on it,” Thugge noted.
Despite this early warning, CMA only recently requested additional information, sending another letter on March 5, asking for transaction details covering the period from September 2023 to September 2024.
Thugge assured the committee that CBK would provide the requested data.
CBK’s Director of Financial Markets, Dennis Luusa, who also serves as a board member at CMA, clarified the regulatory responsibilities in the matter.
“As the governor mentioned, there has been communication from the Central Bank when we noted some of these concerns. CMA has the responsibility of oversight over licensed and listed securities trading,” Luusa stated.
“As joint regulators in this space, we will provide all necessary information back to CBK and to this committee when required.”
MPs have questioned why the CMA failed to act despite multiple warnings, calling for an investigation into potential negligence.
Gathungu placed NSSF managers under scrutiny for maintaining investments in financially struggling companies, raising concerns over the fund’s ability to safeguard workers’ retirement savings.
NSSF, a government agency responsible for collecting, managing, and investing employees’ contributions for future benefits, has been plagued by financial scandals over the years.
The latest audit report reveals that the fund purchased shares worth Sh247 million in Consolidated Bank of Kenya.
However, within the review period, the value of these shares collapsed by Sh209 million, leaving them worth just Sh38 million as of June 30, 2023.
The audit further exposes additional losses in NSSF’s investment portfolio.
Shares held in East Africa Portland Cement, Sameer Africa, and Athi River Mining collectively dropped by Sh50 million in value.
Initially valued at Sh221 million in June 2022, these investments had depreciated to Sh170 million by the end of the audit period.
