Parastatals in crisis as reforms stall

Parastatals are facing a major crisis as key positions remain vacant for close to a year, a situation that threatens to cripple operations at major state-owned corporations.

Running operations in these entities has become so strenuous.

For instance, the process of filling the vacancies or merging some entities with others have become so politicised that the government is now considering appointing officers to serve on interim basis for a year.
Public Service Commission Chair Prof Margaret Kobia pointed out that the situation is so grave some entities are operating without key officers.

So bad is the situation that some Principal Secretaries have taken advantage of the situation to demand that the ministry through their offices control procurement of parastatal under them. Ordinarily, it is illegal PS’s to interfere with the procurement processes of such entities.
For instance, Industrialisation Principal Secretary Wilson Songa, said credible sources within the ministry, wrote to Numerical Machining Complex (NMC) two weeks ago, a copy of which we have seen, stopping an award of tender for consultancy services for a steel mill.

NMC has no board of directors as the previous one had been declared illegally constituted by the court.
Songa similarly stopped the procurement of medical cover for NMC staff given that the previous cover has since expired. This is just an example of the difficulties facing various parastatals. Insiders say thanks to these woes, they can’t employ, procure key items nor implement critical development plans. But even worse are the politics surrounding the merging of state corporations with key players within the ruling coalition vehemently opposing the move.

Traditionally, top jobs in state corporations are used by the government of the day to reward their political cronies. Under the current circumstances, key Jubilee luminaries see President Kenyatta’s intent to reduce the number of state corporations as a big blow.

They believe the move will significantly reduce opportunities to necessary to accommodate people they consider politically useful.
The recommendations that would have seen close to 75 parastatals merged or dissolved has not been implemented. The government, because of the politics involved, has refused to disclose if and when the said reforms are likely to be fully implemented. Apart from the contribution of politicians to the chaos around parastatals reforms, are also top officials heading entities likely to be merged as they strategically place themselves to head the wider institutions once fully merged.

Senior parastatals officers who spoke to us on condition of anonymity said they have been ‘kept in the dark’ for the past one year and their jobs, therefore, seem insecure.
This insecurity was cited to be the greatest impediment to effectiveness in the crucial government offices.
In December last year, the government banned recruitment of top officers in all State corporations.
It means that for close to ten months now, some State corporations have been operating without the top leadership—crucial for key decision making and oversight.

Some parastatals have Chief Executive Officers (CEOs) who have acted longer than it is legally allowed, some have no chairpersons and others do not even have boards of directors. Those that lack functional heads include Kenya Wildlife Service (KWS), Kenya Forest Service (KFS), Constituency Development Fund Board, the Rural Electrification Authority (REA) and the Urban Roads Authority.

Pending bills

At the same time, the terms of service for most executives in regional offices expired last year but they remain in office pending renewal of their contracts. “We don’t have a CEO or a board, yet you expect people to perform? Those who are in senior positions, on the other hand, are not keen on production as they are worried about their future. We don’t understand what is happening,” the source said.

Public Service Commission Chair Prof Margaret Kobia, admitted that indeed some parastatals are operating without the crucial leadership pending implementation of the reforms. According to Kobia, delays in restructuring has been occasioned by two pending bills - Government Owned Entities Bill 2014 (GOE) and the National Sovereign Wealth Fund Bill 2014—that must be passed by parliament.

Kobia revealed that The Office of the President (OP) is planning to appoint interim CEOs and boards of directors for affected corporations to take over as they await the passage of the bill. “Some of them do not have directors, CEOs or proper boards. But this has been occasioned by the two pending bills...I cannot tell how long it will take before they are passed to law since the National Assembly is currently on recess,” she said. The PSC chair said the two bills were submitted to the Commission for Implementation of the Constitution for public participation before they are debated in parliament.

Such entities have, for several years, been regarded as cash cows and reward mechanisms for political cronies by top government officials. While appointing 26 parastatal heads last year, President Uhuru Kenyatta picked 15 politicians who lost in the March 4, General Election.

It will be remembered that efforts to merge KWS, KFS and Nyayo Tea Zones, aborted after conservationists opposed the idea and threatened to withdraw funds.
“There is a lot of opposition from World Bank, Treasury and Parliament on the idea of merging the three entities,” a source who works with one of the parastatals said.
A Presidential Task Force on Parastatal Reforms chaired by Mr Abdikadir Mohammed— the Government’s constitutional and legal affairs advisor— and Mr Isaac Awuondo, the group managing director at Commercial Bank of Africa, had proposed merging of 28 parastatals and the dissolving of another 42.

The politics

Another 21 will be dropped from the list of State Corporation’s altogether while 22 will have their functions transferred to other institutions including counties to reduce the numbers from the current 262 to 187. Parastatals will also be split into commercial state corporations, executive agencies with strategic functions, and independent regulatory agencies.

Research institutions, public universities, tertiary education and training institutes will also be classified as Government Owned Entities. Kenya Agricultural Research Institute (Kari), Coffee Research Foundation, Tea Research Foundation and the Kenya Sugar Research Foundation (Kesref) have already been merged.

Kenya Agricultural and Livestock Research Organisation (Karlo) now oversees the operations of the then three independent entities and has a board of directors. The GOE Bill is meant to ensure parastatals adopt a more efficient structure, by either merging or doing away with some to promote efficiency.

It also provides a unified and comprehensive framework for the establishment of government owned entities; to provide for their classification, management and governance. The National Sovereign Wealth Fund Bill on the other hand changes how Government manages its shareholding in listed companies.