Corporate Governance and Access to Finance - ESBG

Corporate GovernanceKPOSB is wholly owned by the Government of Kenya and reports to theMinistry of Finance, and is not supervised by the Central Bank of Kenya.The responsibilities of the Ministry of Finance include supervision andpolicy guidance. Deposits are mainly invested in government’s TreasuryBills and Bonds.KPOSB’s Board is composed of five non-executive directors, who maintaincontrol over strategic, financial, operational and compliancerequirements, and the Managing director, who is in charge of runningthe day-to-day operations. The five non-executive Directors are theChairman, a representative of the government of Kenya, who is currentlythe Permanent Secretary to the Treasury, and three additional members.The Board is appointed by the government for a 3-year term, which maybe renewed, extended and/or terminated and new members appointed.The criteria for the appointment of the members of the Board arecompetence, strategic priorities and gender. Competence is a particularlyrelevant criterion since the lack of skills may lead to mismanagement ofthe financial institution. Regarding gender, at least one third of themembers of the Board must be women. Currently there are three womenin the Board if the Secretary (who seats in the Board) is also considered.To ensure focus on delivery of the responsibilities, three Board committeeshave been recently established: Risk, Audit and Human Resources.The committees, chaired by a member of the Board, incorporatemembers of the management team. Following good corporategovernance practices, the Chairman of the Board does not sit in thesecommittees in order to ensure neutral opinion on the issues. The HumanResources is in charge of selecting the senior managers after following aprocess where positions are advertised both internally and externally.The appointment of the Managing Director involves a process whereboth the government and the Board participate. The Board is responsiblefor pre-selecting three candidates through a competitive process, whomust meet certain skills, while the government takes the final decision onwho is to be appointed. The term of office of the Managing Director isthe same as that of the Board members (3 years). The rest of KPOSBmanagement team is selected by the Board, independently from thegovernment, and the Board has full power to sanction these managersbased on their performance which is evaluated on a semi annual basis.123