The National Social Security Fund has reduced its stake in the East African Portland Cement Company (EAPCC) in what has seen the cement-maker cease being State-owned because the combined government holding has fallen below 50 per cent.
The State-controlled NSSF has reduced its stake from 27 to 23 per cent after it transferred 3.6 million shares now worth KES200m to its workers retirement benefit scheme – which is a private entity.
This has cut the government shareholding in the cement company to 48 per cent since Treasury has a 25 per cent direct stake. This will remove State restrictions on EAPCC’s operations in Kenya’s competitive cement market.
Portland Cement has maintained that its compliance with State rules, especially on procurement, was blunting its competitive edge at a time when its rivals like Bamburi Cement and Athi River Mining (ARM) are not shackled by bureaucratic regulations, allowing them to make decisions fast.
“NSSF reduced its stake by four per cent, meaning that the State’s shareholding has now reduced to below 50 per cent, and that we are now a public limited company and not a parastatal,” said Mr Kephar Tande, the firm’s managing director.
“I would like to emphasise that part of the problem with the running of EAPCC involved a lot of government restrictions, specifically the Public Procurement Act and the State Corporations Act. We will now operate like a strictly commercial enterprise.”
The NSSF move was informed by the conversion of its workers pension scheme from a defined benefit plan to a defined contribution, which employers bear the risk of the performance of the fund as opposed to the latter where the burden is shouldered by employers.