The Capital Markets Authority (CMA) has reported a notable improvement in corporate governance standards among issuers of securities to the public, with the overall governance score rising from 74 percent in 2023/2024 to 79 percent in the 2024/2025 financial year.
The improvement, CMA said, reflects enhanced board structures, stronger compliance with governance regulations, and a shift from disclosure-based to implementation-based assessments.
Speaking on the findings, CMA Chief Executive Officer Wyckliffe Shamiah said, “The 5 percent improvement in the overall governance score marks a decisive crossing from good governance to governance leadership. Kenya's issuers have advanced nearly 24 percent since the first report was issued in 2018, a testament to improved performance underpinned by a shared vision of excellence.”
The eighth annual report assessed 53 issuers listed on the Nairobi Securities Exchange and those issuing corporate bonds, measuring their application of principles, recommendations, and guidelines contained in the Code of Corporate Governance Practices for Issuers of Securities to the Public, 2015 (CG Code).
The CG Code is now a mandatory continuing obligation under the Capital Markets (Public Offers, Listings and Disclosures) Regulations (POLD).
Among the seven governance principles assessed, Board Operations and Control posted the largest single-year improvement, rising by 9 percent from 68 percent to 77 percent, achieving a Leadership Rating. This improvement was largely attributed to issuers realigning board composition, including the formal designation of Independent Non-Executive Directors and Non-Executive Directors in compliance with POLD Regulations, 2023.
Other principles that improved included Accountability, Risk Management & Internal Control, Ethics & Social Responsibility, Rights of Shareholders, Transparency & Disclosure, and Stakeholder Relations.
According to the report, the Banking, Energy & Petroleum, Insurance, Manufacturing & Allied, Investment & Investment Services, Construction & Allied, and non-listed issuer sectors all attained Leadership Ratings, while the Commercial & Services & Telecommunications sector recorded a Good Rating, and the Agricultural sector a Fair Rating.
The Energy & Petroleum sector recorded the highest sectoral improvement at 11 percent.
CMA CEO highlighted the growing sophistication of the CMA’s methodology: “Our assessment has advanced from a disclosure-based approach to an implementation-based approach, requiring issuers to document specific initiatives demonstrating how they are applying CG Code provisions in practice.”
The report also pointed to emerging governance priorities, including cybersecurity risk oversight, artificial intelligence monitoring, institutional investor stewardship, and minority investor protection.
CMA is finalizing an ESG Code in partnership with the International Finance Corporation, NSE, and issuers, alongside deploying the AI-powered MALENA tool to strengthen ESG and governance assessments.