Kenyan Parliament Calls CMA to Account Over NSSF’s Sh2 bn Loss

When Kur​ia Kimani, chair of the Finance and National Planning Committee and MP for Molo, learned that the Capital Markets Authority (CMA) had sat on warnings about irregular bond trades, she didn’t waste any time. The committee has now summoned the regulator to explain a potential NSSF loss of up to Sh2 billion that could dent the retirement savings of millions of Kenyan workers. The summons comes after the Central Bank of Kenya (CBK) told parliament that it had alerted the CMA as early as August 2023 about suspicious transactions involving the National Social Security Fund (NSSF).

Background to the NSSF Investment Controversy

The controversy traces its roots to a series of bond purchases and sales made between May and July 2024. According to a letter dated 19 August 2023, Kam​au Thugge, Governor of the Central Bank of Kenya, flagged the trades as “potentially irregular” and asked the CMA to intervene. A follow‑up note on 1 August 2024 repeated the same concerns, attaching detailed transaction data that showed bonds worth Sh5.2 billion were sold for just Sh4.32 billion – a shortfall of Sh789.2 million.

Those bonds were held in accounts linked to the NSSF Central Securities Depository (CSD) and involved a private individual, Hum​phrey Wachira Gichuru, as well as Pergamon Investment Bank Limited. The arrangement raised eyebrows because the NSSF’s 2020 Investment Policy Statement explicitly requires that all investments be "prudent" and aimed at maximising returns for contributors.

Parliamentary Action and CMA Summons

During a session on 5 March 2025, the committee’s chairperson announced a written demand for the CMA to appear before Parliament. “We will write to them to appear before us and shed light on these NSSF dealings where pensioners are feared to have lost up to Sh2 billion,” Kimani told fellow lawmakers. The call‑up is not just a political gesture; it’s a legal push to force the regulator to disclose why it waited until March 2025 to request additional information, despite having been warned months earlier.

The CMA, founded in 1989 under the Capital Markets Act, responded that it needed “more comprehensive data on NSSF’s stock‑market activities from September 2023 to September 2024.” Critics argue that the regulator’s own delay contributed to the loss, a point that will be examined in detail during the forthcoming hearings.

Audit Findings and Financial Impact

In its FY 2023/24 report, Auditor‑General Nas​s​y Gathungu highlighted three main red flags:

• Shares in East Africa Portland Cement, Sameer Africa and Athi River Mining fell from a combined valuation of Sh221 million in June 2022 to Sh170 million by the end of the audit period – a loss of roughly Sh50 million.
• Bonds sold at a discount created a Sh789.2 million shortfall, breaching the NSSF’s own investment policy.
• Investments were made in cash‑strapped companies, raising questions about the due‑diligence performed by the six external fund managers overseeing the fund.

When NSSF CEO David Koross appeared before the Public Investments Committee on Social Services, Administration and Agriculture (PIC‑SSAA), he admitted that the bond sales were “off‑loaded at a loss” but insisted that the decisions were delegated to the external managers under the fund’s policies. “We acted in good faith based on the advice we received,” he said, a line that many observers found unsatisfying.

Reactions from Regulators and Stakeholders

CBK’s Governor Thugge reiterated that the central bank had fulfilled its duty by flagging the trades in writing. “We cannot sit back while public resources are mis‑managed,” he told the committee, adding that the bank had also been monitoring the new Sh10 billion core‑capital requirement for commercial banks.

Members of the opposition, like Saboti MP Cal​eb Amisi, questioned the efficiency of letting six fund managers operate with “full discretion.” He asked, “Was this really the most efficient way to invest Sh12 billion in bond transactions?” The sentiment was echoed by pensioner advocacy groups, who staged a brief protest outside Parliament, holding placards that read “Our retirement, not their profit.”

Potential Implications for Kenya’s Pension Landscape

If the CMA is found negligent, it could face stricter oversight from Parliament, possibly leading to legislative reforms that tighten the reporting requirements for pension fund investments. Some analysts predict that the episode may accelerate the push for a more transparent, real‑time monitoring platform linking the CBK, CMA, and major pension schemes.

Beyond regulatory reform, the scandal could erode confidence in the NSSF, prompting workers to consider alternative private pension schemes. That shift would have a cascading effect on the capital markets, where the NSSF has traditionally been a large, stable investor.

What Comes Next?

The CMA is expected to appear before the Finance and National Planning Committee within the next two weeks. Lawmakers have said they will consider sanctions if the regulator cannot justify the delay. Meanwhile, the Auditor‑General’s office is preparing a follow‑up report that may recommend criminal investigations into the individuals directly involved, including Humphrey Wachira Gichuru and senior officials at Pergamon Investment Bank.

For pensioners, the immediate concern is whether the lost Sh2 billion can be recovered. The committee has already signalled that any restitution, if possible, will be pursued aggressively.