Gender Diversity on Boards declined in 2017 by 16pc – Report

By David Indeje / Published June 27, 2017 | 12:04 pm





Incorporating gender diversity in the 50 listed companies at the Nairobi Securities Exchange declined to 16 percent in 2017, according to Cytonn Investments  Corporate Governance Index Report – 2017 published on Monday.

Although significant progress has been made since 2016, when women represented just  from 18.3  percent of board level members, the slight drop from 2016 to 2017 and a worrying state.

“This is an indication that there remains a lot more to be done by companies with regards to having female members on their boards, and we believe that full compliance to the Capital Markets Authority’s (CMA) Code of Corporate Governance Practices will be key in achieving this,”  said Maurice Oduor, Cytonn’s Investments Manager. 

Cytonn’s report also noted that companies with well-diversified boards in terms of gender and ethnicity outperformed those with low diversity in board composition in terms of gender and ethnicity.

It is only Barclays Bank of Kenya that retained its top position with a gender diversity score of 50.0 percent, same as the previous score of 50.0 percent.

Stock for top 25 companies in gender and ethnic diversity delivered a return of 40.2  percent and 26.1 percent, respectively, while the bottom 25 companies delivered a return of (8.1  percent) and 10.3  percent, respectively, over the last five years.

The report notes that Compared to 2016, the average performance for companies has improved by 4.1 percent to an average score of 65.7 percent, from 61.6 percent  in 2016 mainly driven by better disclosures around governance.

“The improved performance is a result of increased focus on corporate governance as well as heightened regulation from oversight bodies. This is a positive move towards stabilizing the sector .”

The report, released once every year, ranked all  companies with a market capitalization of over Kshs 1 bn, which equates to 50 companies on the Nairobi Securities Exchange and account for 99.8 percent of the market cap.

The main areas of analysis are in: board composition, audit functions, CEO tenure and evaluation, remuneration, and transparency.

“Sound corporate governance practices and structures are essential for any firm today, especially those that are listed. Corporate governance in Kenya has come under the spotlight, which is partly attributed to the billions of losses that investors have suffered due to poor corporate governance.

What is most notable is that after the ranking across the 24 metrics, the top half companies in terms of corporate governance have also delivered markedly better returns to their investors with the shares delivering a 43 percent better return than the bottom half, a clear indicator that corporate governance matters and investors should factor corporate governance in their investment decisions” said Elizabeth N. Nkukuu, CFA, Cytonn’s Chief Investment Officer, at the release of the report.

Cytonn Investments Comprehensive Score ranking on corporate governance report 2017



In the report, KCB Group, Diamond Trust Bank Group and Jubilee Holdings emerged as the top three listed firms scoring the highest as a result of having the best corporate governance structures and practices.

Uchumi was the most improved company with a comprehensive score of 60.4 percent from a score of 37.5 percent in the last report. The improvement was attributed to better disclosures on board composition and activities such as meetings and evaluation of the board, shareholding of directors, and rotation of their auditor to KPMG from EY.

WPP Scangroup improved to 66.7  percent from a score of 45.8  percent last year while Liberty Holdings came in as the third most improved company with a score of 81.3  percent from 66.7  percent in 2016.

EA Cables led the top decliners with a comprehensive score of 54.2 percent from a score of 62.5 percent in 2016. This was due to: a decline in female representation in the board, a decline in board meetings attendance by board members, and an increase in the average age of board members.

Kakuzi Limited and Kenya Airways were the second and third top decliners with Kakuzi Limited’s score declining to 54.2  percent from a score of 60.4 percent last year and Kenya Airways score dropping to 60.4 percent from a previous score of 66.7  percent.




About David Indeje

David Indeje is a writer and editor, with interests on how technology is changing journalism, government, Health, and Gender Development stories are his passion. Follow on Twitter @David_IndejeDavid can be reached on: (020) 528 0222 / Email: info@sokodirectory.com

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