Privatisation law strips Parliament of oversight role in sale of state corporations

 

President William Ruto signed the Privatisation Bill of 2023 into law at State House Nairobi on October 9, 2023. [PCS]

President William Ruto has assented to the Privatisation Bill, 2023, a contentious legislation that will significantly restructure the management and privatisation of state-owned corporations.

The new law strips Parliament of its oversight role in the privatisation and nationalisation of State corporations and grants sweeping powers to the Cabinet Secretary.

President Ruto assented to the Bill at Kisumu State Lodge, on Monday, in an event witnessed by Deputy President Rigathi Gachagua, National Assembly Speaker Moses Wetangula and Majority Leader Kimani Ichung'wa.

The legislation removes the requirement for parliamentary approval for members of the Privatisation Authority, centralising authority in the CS.

Under the new law, the CS will determine the state corporations to be privatised, the individuals responsible for privatisation, and the methods to be employed.

The law dictates strict confidentiality in the privatisation of state corporations. The law states that "any information obtained or sought by the authority will remain confidential unless approved for disclosure by the authority."

The law states that the violation of this provision may result in a Sh5 million fine or two years imprisonment.

President Ruto said that the legislation repeals the Privatisation Act, 2005, which was enacted before the 2010 Constitution.

He explained that the new law will remove bureaucracy from the privatisation of non-strategic or loss-making government entities.

“In the new move, privatisation will be done through the initial public offering of shares, the sale of shares by public tender, the sale resulting from the exercise of pre-emptive rights, or through any other method that will be defined by the Cabinet," read a statement from State House.

The new law, which puts more in the hands of the president and Treasury CS in the privatisation of 26 parastatals, including the Kenya Meat Commission, Development Bank of Kenya, Agrochemical and Food Corporation (ADC), Kenya Safari Lodges and Hotels Limited, New Kenya Co-operative Creameries, and state-controlled sugar companies, limits decision-making and public accountability.

The law provides that government-owned entities cannot participate in privatisation.

"The Privatisation Bill, 2023, marks a significant departure from the previous Privatisation Act of 2005. Its stated purpose is to improve the efficiency and competitiveness of Kenya's productive resources by streamlining the privatisation process and removing bureaucratic obstacles," reads the summary of the law.

A significant point of contention is the removal of parliamentary approval, as the law essentially sidelines Parliament, which traditionally acts as a representative of the people. This has raised concern about the extent of public oversight and accountability in the privatisation of state assets.

"The Cabinet Secretary shall identify and determine the entities to be included in the privatisation programme," reads the law, highlighting the broad powers granted to the CS.

The Privatisation Bill, of 2023 repeals Privatisation Act of 2005, which was enacted before the 2010 Constitution of Kenya. It establishes the Privatisation Authority and sets new rules for state asset privatisation.

The law, which underwent one week of public participation, it generated controversy due to the exclusion of citizens from participating in decisions related to the sale of state-owned enterprises.

A pivotal element of the law is the creation of Privatisation Authority whose members will enjoy immunity in their decision-making process.

Furthermore, the law empowers the CS to determine methods for privatisation, including initial public offering of shares and sale through public tendering.

Ichung’wah noted that the law assigns the responsibility of formulating the privatisation programme to the CS.

“The privatisation programme shall be submitted to and approved by the Cabinet. The role of the National Assembly shall be to ratify the programme,” he said.