The announcement that the National Treasury will take the lead in the crafting and implementating Kenya’s plan to privatise scores of State-owned enterprises is highly welcome.
New draft rules released for public participation indicate the government plans to replace the Privatisation Commission with a Privatisation Authority that it hopes will streamline the process of selling the public corporations. The rules propose that the National Treasury Cabinet Secretary be in charge of the process, including guiding the policy and implementation of the privatisation, and cutting the number of board members from 11 to nine.
Part of the changes will include scrapping a steering committee which, under the commission, was perhaps seen to be part of the bureaucracy that has held back the sale process. The government has for long been keen to offload its stakes in at least 26 companies for strategic or financial reasons, with many of the firms operating below expectations.
Despite these intentions, however, there has been little progress and the commission – established in 2008 - has only managed one sale. In 2014, the commission sold a 26 per cent stake in Kenya Wine Agencies to South Africa’s Distell.
Other planned disposals are at various stages, including five sugar millers that have been dangled to potential investors for years and several hotels, among them the iconic Intercontinental and Hilton hotels. The government also seeks exit from various manufacturing and service providers.
Amid this delay to sell, taxpayers continue to bail out numerous public enterprises that bring little or no dividends to the country while others, despite their strategic importance such as Kenya Airways, cannot keep themselves afloat. Each year, Treasury sets aside some funds in the budget to bail out these companies – money that would be better spent on development projects to benefit mwananchi.
It is our hope that the proposed changes will unlock the stalled sale of poorly performing State-firms. This will not only free taxpayers from the burden of supporting insolvent firms, but also bring much-needed income from the sale.