Freeze spending in parastatals to stem theft, MPs say amid review

By Stephen Makabila

The Parliamentary Public Accounts Committee (PAC) chairman, Budalangi MP Ababu Namwamba, has said the government should have frozen operations in all parastatals before embarking on their ongoing review.

Mr Namwamba has cautioned that carrying out such a serious review while at the same time allowing the firms to operate as normal could create room for mischief.

“You cannot undertake such a critical audit while the parastatals continue to operate business as usual. This could end up being little more than cosmetic window dressing, or even a red herring to camouflage rot and sleaze in these public entities,” he said.

After collapsing of ministries from 44 to 18 in April, President Uhuru Kenyatta unveiled a 10-member team to review parastatal policies, identify challenges and propose a new policy direction for State firms.

The team include Mohamed Abdikadir (Executive Office of the President), Kamau Thugge (National Treasury), Mugo Kibati (Vision 2030), Korir Sing’oei (Deputy President’s Office), Stella Kilonzo (Private Sector), Angalie Mediratta (Private Sector), Isaac Awuondo (Commercial Bank of Africa), Nelson Kuria (CIC Group), Carole Kariuki (KEPSA) and Edward Burbidge (Burbidge Capital Ltd).

Abdikadir, who is the head of the task force, had already noted that despite the heavy funding, debts that have been written-off within the parastatals were enormous and most of them have been draining the economy without generating returns.

Panic withdrawals

Currently, the country’s close to 300 parastatals have a Sh400 billion annual budgetary allocations from the State, with over Sh150 billion going to wages.

Abdikadir has indicated it will take the task force two weeks to conclude the review. Members of the public have already been invited to provide their views on how to review the parastatals.

But latest concerns by Namwamba and his team are linked to reports of some panic withdrawals, unnecessary expenditures on workshops and disposal of assets over uncertainty on which parastatals are likely to be merged, scrapped or retained.

There are indications the number of parastatals may be cut to 151, up from over 300, with those under the agricultural sector being reduced from about 70 to 39.

Asked about reported panic withdrawals and asset disposal in some parastatals, Namwamba noted, “PAC is unaware, and is presently not seized of this matter. This past month we have been wholly focused on reviewing the Auditor-General’s audit report for fiscal year 2011-12, and several special audits.”

Devolved corruption

The PAC chairman however warned on panic withdrawals and misuse of funds. “That would be a grave fiscal aberration that would attract intense and decisive action from us. Let anyone that may be so minded be forewarned not to dare...don’t even think about it!”

Mars Group CEO Mwalimu Mati said incase of any financial misappropriation over the ongoing review period, accounting officers in affected parastatals should be held accountable.

“The government has means of holding accounting officers punishable and in my view, freezing of operations may not be necessary,” added Mati.

Kitui Central MP Makali Mulu, who has been carrying out consultancy work on strategic management, said the taskforce should first define roles and mandates, then come-up with clear governance structures, clear targets and ensure those retained are ran  professionally.

The MP, who has in the past done strategic planning for the former Kenya Anti-Corruption Commission (KACC), Kenya Bureau of Standards (KEB) and the National Council for Administration of Justice, said the task force should only retain parastatals that are critical and which add value to the country.

“The task-force should ensure 70 per cent of the budget in parastatals goes to development while 30 per cent to recurrent expenditure if these bodies have to be of economic value,” added Mulu.

Mulu claimed that parastatals have become entities for rewarding those who are politically correct, leading to mismanagement that has seen most of them make losses.

“Those that have duplicate roles are the right candidates for merging. Boards of those to be retained should be given powers to hire and fire. Line ministers should not have excessive power. Their power should be limited to information sharing,” added Mulu.

The MP further pointed out that parastatals should not be devolved, as that could be tantamount to devolving corruption to the counties, but should rather remain under close watch of the national government.

Poor products

Despite the important socio-economic roles most of the parastatals in the country are supposed to play, they are characterised by inefficiency, losses and the provision of poor products and services as pointed out above.

Against the background of mismanagement in some of these state firms over the years, international organisations such as the International Monetary Fund (IMF) and the World Bank proposed the privatisation of Kenyan parastatals in 1994.

The Structural Adjustment Programs (SAPs) were aimed at reducing government participation in the economic sector and to increase the productivity of parastatals.

Since then, this intervention has led to privatisation as a solution to the problems of parastatals even though the exercise has not brought the much coveted efficiency gains.

Privatisation moves in parastatals within sugarcane growing areas have been opposed by cane farmers who fear losing stake and control over what they view as their resource.