Government cautioned against plan to sell state assets

Water fountain around Mzee Jomo Kenyatta monument outside KICC and Parliament Buildings during the African Climate Summit on September 06, 2023. [Stafford Ondego, Standard] Hospitality industry investor Nazir Jinnah has said the selling of critical state assets as proposed by the government needs careful consideration before deal is finalized. Jinnah has expressed concerns that the country risks losing its identity by disposing of some assets like the iconic Kenyatta International Conference Centre (KICC) to private owners. Last month, the Ruto government said it plans to sell 11 more state agencies, including the Kenyatta International Convention Centre and the cash-rich National Oil and Kenya Pipeline Company. The National Treasury also listed the Kenya Literature Bureau (KLB), Mwea Rice Mills Ltd (MRM), Western Kenya Rice Mills Ltd (WKRM), New Kenya Cooperative Creameries Limited (NKCC) and Numerical Machining Complex Limited (NMC) as potential investment opportunities for interested parties. The Kenya Vehicle Manufacturers Limited, Kenya Seed Company Limited and Rivatex East Africa Limited are also among the agencies lined up for sale by the government. The National Treasury said the entities to be put up for sale will help it raise additional revenue. But in an interview on Tuesday, Jinnah said while the move might bear positive fruits, those involved must be careful and take a lot into consideration. The move saw a High Court sitting in Nairobi block the state from selling the said 11 parastatals in a suit by opposition leader Raila Odinga. The orders issued by Justice Chacha Mwita will be effective until February, next year, when the case filed by former Prime Minister Raila Odinga's party, Orange Democratic Movement (ODM), will be heard. "A conservatory order is hereby issued suspending implementation of Section 21(1) of the Privatisation Act 2023 and or any decisions made pursuant to that section, until 6th February 2024," Justice Mwita ruled. President William Ruto is however determined to privatise them in a bid to save up to Sh70 billion of the Sh250 billion being spent on running the firms. Jinnah wondered if the due diligence has been followed, in a bid to address the pertinent issues raised by Kenyans and key state stakeholders. As it is, he lamented that it is not clear how the state intends to privatise the earmarked parastatals and who the potential beneficiaries are, among other long list of concerns. Hospitality industry investor Nazir Jinnah. [Courtesy] He cautioned against hasty actions that could compromise the country's economic stability and international standing, urging a more thoughtful approach to safeguard Kenya's reputation. Acknowledging the potential benefits of private-public investment opportunities, Jinnah advocated for engaging qualified investors capable of creating employment opportunities and fostering strategic partnerships beneficial to the nation. He emphasised the delicate balance between progress and caution in navigating the complex landscape of asset disposal. In a passionate call to action, Jinnah urged the government to instead act swiftly in recreating Nairobi's business fabric. He stressed the importance of revitalising key assets and reopening prominent hotels like Hilton and the Intercontinental in a bid to re-establish Nairobi as a vibrant hub for international conferences and business activities. "Ideally, KICC is an asset worth Sh30 billion. Nominally, it should make up to Sh3 billion in a financial year. But it is only managing Sh29 million or at times Sh40 million. Is this financially realistic?,'' President Ruto posed during a recent joint media interview. The President was concerned that Kenyans were overtaxed, yet there existed enormous potential to sweat the country's assets to ease the burden of tax. "This is the reason; I am suggesting that we sweat our assets to make more money and dividends to help ease the burden of taxation on Kenyans.," he said. The President said that during the recent Africa Climate Summit held at KICC in Nairobi, he had to spend Sh1.8 billion to make the facility reflect its iconic image to host an international conference of that magnitude. Kenya last privatised a state-owned company in 2008 with an initial public offering (IPO) for 25 per cent of the shares in telecommunications firm Safaricom. The country revised its privatisation law last month to remove 'unnecessary bureaucracies' according to President Ruto, who said the government's new drive would boost Africa's pipeline of company floatation.

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