Ndung'u: Privatising parastatals meant to address corruption

Treasury CS Njuguna Ndungu (right) and PS Julius Muia during a past presser. [Boniface Okendo, Standard]

National Treasury Cabinet Secretary Njuguna Ndung'u has defended the government's plan to privatise key parastatals saying the move will end corruption and mismanagement of the entities and return them to profitability.

Prof Ndung'u, who spoke in Mombasa yesterday said some of the parastatals are draining the exchequer which is forced to bail them out whenever they are in financial problems.

The CS, who was responding to questions from the Senate Committee on Finance and Budget during their induction, said the government is not selling off assets but looking at ways of injecting capital into the agencies.

"Privatisation through the Nairobi Stock Exchange will enable Kenyans to buy and sell shares, increase accountability, improve corporate behaviour, and stop the draining of government resources by the state-owned enterprises," Ndung'u said.

He added: "We are not selling the assets but improving the parastatals to create efficiency. We have diverse methods of privatisation and when we privatise, we inject new capital which will make them profitable and create value. And citizens are free to participate."

The CS said they will not be borrowing money anymore to bail out enterprises, some of which he said have been making losses and are being mismanaged.

The CS noted some countries have gone bankrupt because of supporting their struggling airlines, making reference to Kenya Airways (KQ) which the government has had to bail out every now and then. However, KQ, he said, is not among public entities set for privatisation.

The committee is led Mandera senator Ali Roba and his vice chairperson, nominated senator Tabitha Mutinda. Also present during the session were committee members, Kisii senator Richard Onyonka, and nominated Senator Shakila Abdalla.

The senators questioned why KQ, despite making losses and experiencing flight delays, was not among those listed for privatisation. The senators also sought to know how the Treasury will deal with pending bills and if the government will be borrowing more in the face of ballooning public debt.

Ndung'u said the government is not going to borrow more but have a fiscal space that will encourage fiscal consolidation, which refers to concrete policies aimed at reducing government deficits and debt accumulation.