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Make State corporations and enterprises growth enablers

By Billow Khalid | September 13th 2020 at 12:00:00 GMT +0300

In Kenya, as in many other countries, State corporations and enterprises are known to be the critical engine of productive economic activities.

Globally, it is estimated that at least one-third of the world’s gross product and one-half of the world’s profitable public investments are accounted for by governmental enterprises or corporations. These State firms perform crucial functions and are found in almost all sectors.

According to the Inspectorate of State Corporations, there are about 220 State corporations and enterprises. They are the engine for driving the Kenyan economy and the achievement of Vision 2030 — Kenya one, Kenya first, Kenya the best.

They run electric utilities, broadcasting and postal services, national irrigation projects, railroads, airline and airports, sea ports, pension funds, hospitals, public highways, water boards, wildlife, universities, housing schemes, agriculture, livestock trade and micro- and small-enterprises among others. These State organisations are valuable means to ‘rebuild the ship of State’, plank by plank, while it remains steady and afloat.” 

The proliferation of State corporations are driven by the fact that they have been recognised as mechanisms, which allows for more autonomy, business like effectiveness, efficiency and agile strategic management than is thought to be available from government bureaucrats.

Public authorities or enterprises represent a kind of managerial capitalism approach, where managers of State enterprises vigorously pursue the interests of the stakeholders, the Kenyan public, in a manner which is effective, revenue- producing and self-sustaining.

National goals

The national goals to which State enterprises, and corporations or even commissions are expected to play critical roles are, full employment, economic productivity growth, security and stability. Yet, careful reviews of the past performance of Kenya’s State corporations and enterprises show that whereas some often perform very well, majority of them have crisis with their finances, key stakeholders and effective, sustainable delivery of their mandates, thereby making them a burden on the National Treasury. For instance, what has happened to Kenya Meat Commission (KMC)? KMC was and still is a State enterprise with great potential, but never gained its foothold. The equivalent of KMC in Zambia is Zambeef.

Zambeef makes annual profit of about Sh300 million. In 1996, Kenya National Transport Company (Kenatco), unable to repay a loan of Sh17 million from National Bank of Kenya, was put under receivership. The loan has grown to Sh1.2 billion. People ask why? Apparently, for the past 24 years, it had hopes of rescue based on a post-dated cheque drawn on a bank above the clouds.

Government Employees and the State Officers Pension Fund have been described as “a time bomb”. The pension bill is expected to rise to more than Sh100 billion annually. This is not sustainable. Buildings cannot be held together by the weight of their roofs rather than by the strength of the foundations.

We could borrow a leave from South Africa where the value of Government Employees Pension Fund is more than $180billion. Despite all these challenges, the State corporations and enterprises can be engineered to become pride of the nation, super achievers.

There are two sides to the progressive improvements of organisations, the external and the internal. Reinventing a new strategic vision for State corporations or enterprises is no different. The logic of nature and the reality power of wisdom complement one another.

Leaders of State corporations and enterprises are expected to be high class, agile professionals, knowledge workers, who can manage well complexity, change, and the political environment and service delivery systems.

They are expected to be good in empowering their staff, clarifying and balancing among goals and conducting strategic planning. Only can the country overcome the challenges of what Prof Ali Mazrui described as ‘the pathology of mal-administration, technical backwardness and poverty of ideas.’

In short, the country’s corporations and enterprises have no choice, but to deliver their assigned mandates, results effectively for the nation to achieve its goals, Vision 2030 and the President’s Big Four Agenda.

The Ministry of Public Service and Gender should lead the way in this regard. It should organise a summit for all State corporations, enterprises, authorities and commissions to map out the best ways forward to make them super achievers of their mandates. The country’s promise and goals deserve nothing less.

-Writer is strategic management consultant


State corporations National Treasury Economy
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