Journalist sues the State seeking answers over sale of parastatals


Kenyatta International Conference Centre-KICC is one of the state parastatals set for privatisation by the William Ruto administration. [David Gichuru, Standard]

Major questions on how the government has been disposing of Kenya’s strategic assets have emerged in a case filed by a journalist.

Gitahi Ngunyi, an economic and finance journalist, argues that from 1988, when the government shed 20 per cent of its stake in Kenya Commercial Bank, to date, the sale of parastatals is a fertile ground for abuse and pilferage as the law and policy paper do not ensure accountability.

He claimed Parliament is a mere flower girl in the process, while private individuals make a kill out of the sales. According to him, the current MPs made things worse by amending the Privatisation Act last year and giving the Cabinet secretary sweeping powers.

According to his lawyer Kelvin Oriri, the Privatisation Act, 2023 defies the doctrine of separation of powers.

“The Act undermines the oversight role of Parliament and arrogates to the Cabinet Secretary and by extension the Cabinet, arbitrary powers in a process as significant to the nation as the sale of its strategic assets.”

“The policy paper itself lacks clearly defined processes and provides no checks and balances and or sufficient transparency and accountability mechanisms for transactions as huge and as important to the public interest as the sale of a nation’s resources,” argued Oriri.

He added that the Bill ought to have been considered an ordinary one concerning counties and therefore the Senate should have participated.

“Additionally, having noted that the sale of a good number of these entities would directly affect finances of the counties where they are domiciled, the Bill needed to have been considered by the Commission on Revenue Allocation in terms of Article 205 of the Constitution,” he said.

He further argued that the 2010 Constitution contemplates more government involvement in the economy for the protection of human rights.

This he said, is opposite to the move by President William Ruto to privatise the agencies arguing that private entities do not exist for the wider needs of the public.

“It is common knowledge that the biggest motivation for and indeed the only way to sustain a private business is by maximising on profits. Private businesses do not exist primarily for the wider needs of the public,” he said.

According to Oriri, MPs during the late President Mwai Kibaki’s tenure, passed a privatisation law which was assented to on October 13, 2005, but was frozen for three years, knowing that during this period, the government would shed its shares in several parastatals.

According to him, by the time the Act came into effect in 2008, Telkom and Safaricom shares had already been sold to private individuals.

According to him, the ‘secret sales’ amount to a dereliction of duty by the State to provide essential services to people and is a betrayal to future generations.

“The social contract can also not be delegated by the State to the private sector; the latter is just a complementary partner in that journey but the state cannot formulate a policy and/or enact a law whose purposes are to lay basis for the State to systematically abdicate its roles and auction away its sovereign resources to the highest bidder,” said Oriri.

In addition, Oriri was of the view that the economic policy itself (sale of a nation’s strategic assets) is not grounded on the Bill of Rights.

He argues that all state-owned entities that have been privatised since the Policy Paper was formulated in 1994 and the Privatisation Act passed in 2005, Kenyans are yet to know whether the moves were of benefit to them.

“Kenyans are yet to get a proper audit report or account from the Auditor General, on the proceeds and/or propriety of the said transactions,” he said.

Oriri said that Section 47(2) of the Privatisation Act, 2005, states that proceeds from the sale should be deposited in a special interest-bearing account established specifically for that State corporation to protect the erosion of its balance sheet.


Section 47(3) gives directions on how such monies would be appropriated.

“Kenyans are yet to get specific comprehensive reports on the sale of each entity from the Auditor-General for us to determine whether or not public money has been applied lawfully and in an effective way,” the lawyer added.

The lawyer also questioned the role of the Privatisation Commission in securing the assets. He asserted that it is just a conveyor belt of the minister’s decisions on sales.

He said: “The defunct Privatisation Commission, now the Privatisation Authority will simply implement the decisions of the Cabinet Secretary to which public entity is identified for privatisation.”

Ngunyi’s case comes after the initial challenge of the sale by the Orange Democratic Movement (ODM).

Raila Odinga’s party through lawyer Jackson Awele filed a case last month.

In the case, the court heard that President Ruto signed the Privatisation Bill into law on October 9, 2023. The Bill set October 27, 2023, as the commencement date.

With his signature, the new law gave the Executive powers to dispose of some government assets without Parliament’s approval.

Treasury CS Njuguna Ndung’u then published a privatisation programme for 11 parastatals with Awele noting that the program was however undated.

Among assets that the Treasury listed are Kenyatta International Conference Centre (KICC), Kenya Pipeline Company (KPC), Kenya Literature Bureau (KLB), National Oil Corporation (NOC), Kenya Seed Company Limited, Mwea Rice Mills, and Western Kenya Rice Mills Limited.

Others are New Kenya Cooperative Creameries, Kenya Vehicle Manufacturers Limited, Rivatex East Africa Limited, and Numerical Machining Complex.