Tread carefully on privatisation of state corporations

KICC is among entities listed by the government in a move to sell off several state corporations to reduce public expenditure and do away with loss-making firms. [Samson Wire, Standard]

The government has announced advanced plans to sell off several state corporations to reduce public expenditure and do away with loss-making firms. The privatisation programme seeks to enhance government efficiency and provide value for money to Kenyans and the taxpayers.

On Monday, the government lined up eleven more public entities for sale including the Kenyatta International Conference Centre (KICC) and the cash-rich National Oil and Kenya Pipeline Company (KPC).

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) have also been put up for investors and interested parties to begin the process of acquiring them.

Others are the Kenya Vehicle Manufacturers Limited, Kenya Seed Company Limited and Rivatex East Africa Limited. The National Treasury said the move will help raise additional revenue, and reduce demand for government resources.

It also said some entities have presented competing needs for years, hence the need to do away with some of them. This points to duplication of mandate and services to Kenyan taxpayers.

Estimates show the government could earn a windfall of as much as Sh30 billion annually from sale of troubled State-Owned Enterprises (SOEs). The figure could go as high as Sh110 billion according to budget experts.

The planned privatisation programme will also come in handy for the cash-strapped Kenya Kwanza government. President William Ruto’s administration is also struggling with a narrow fiscal space to roll out its policies, amid high debt repayment obligations.

There are 248 State Corporations, and the privatisation programme will
primarily target commercial enterprises.

Experts also opine that the sale of troubled agencies will improve their performance. However, they warned against misuse of the resources or profiteers getting the firms at a throw-away price.

The privatisation should boost development and improve the standards of living for citizens through access to key services and amenities such as roads, health, food security and education.

For decades, some parastatals have weighed down taxpayers with costly public expenditure but with negligible benefits to Kenyans. Some operate like employment centres where well-connected people are hired and paid for no work done.

Still, as the privatisation goes on, an audit of government entities should be conducted to enhance efficiency.