Over the past month, East African Portland Cement Company has been in the news for all the wrong reasons. Arguably, this could be the very reason major shareholders of the company met last week to review its shareholding structure.
There are two issues shareholders were focusing on. One, the holding of major stake, 41.7 per cent, by rival French Lafarge, which owns the largest cement firm, Bamburi. This has provoked debate over whether Lafarge is running a monopoly in the domestic market in view of the fact that it also owns 15 per cent of the other cement manufacturer, Athi River Mining.
Then there is the matter of irregular listing at the Nairobi Stock Exchange: with National Social Security Fund holding 27 per cent and Treasury 25, under 7 per cent is held by other investors. The rules say that a company should have a minimum 25 per cent listed at the NSE and, therefore, available to other shareholders for trading. This is not the case for Portland.
We welcome the effort by the main shareholders to address the "monopoly" situation and take remedial measures maybe by providing more shares at the Nairobi Stock Exchange. This should raise the cement company’s listed shareholding to a minimum of 25 per cent.
As it is clear that this would entail some shareholders ceding stake to other NSE investors, we are asking the Government and Capital Markets Authority to expedite this process.
Let any solution strengthen competition while making the Portland Cement stronger. In the same vein, while it would be imprudent to tell the Government to let go of Portland, it should reduce its political influence in the company. Monopolies are bad for business, but so are governments – say local reporters. (Reuters).