Kenyans have nine days to submit written comments on the draft Privatisation Bill, 2023 which seeks to provide a regulatory framework for the privatisation of public entities, including State-owned enterprises.
The speedy formulation of the draft Bill and the push to adopt the recommendations follow President William Ruto’s goal of privatising between five and 10 public enterprises by the end of the year.
The government's last successful privatisation was the Safaricom IPO in 2008, indicating no State-owned companies were sold at the Nairobi Securities Exchange (NSE) during former President Uhuru Kenyatta's 10 years in office.
The government has been looking at selling stake in State-owned enterprises to strategic investors as well as to the public through listing at NSE.
“The government is embarking on a review of the current privatisation law with a view of repealing or replacing it with a legal and less inhibiting and more facilitative policy framework to steward rapid privatisation processes,” Ruto said.
There are now about 26 approved privatisation programmes, including KenGen, Kenya Meat Commission, New Kenya Co-operative Creameries, Kenya Pipeline Company Limited, Kenya Ports Authority - Eldoret Container Terminal and South Nyanza Sugar Company Limited.
According to the Privatisation Commission, selling of public entities is expected to mobilise resources for additional investments, enhancement of transparency and corporate governance in the firms, broadening of shareholding in the economy, development of the capital markets and raising resources to support the government budget.
“The objectives of a privatisation undertaken under this Act shall be to encourage more participation of the private sector in the economy by shifting the production and delivery of products and services from the public sector to the private sector...,” reads the draft Bill.
The draft Bill also seeks to establish the Privatisation Authority which among other things will advise the government on all aspects of privatisation of public entities, facilitate the implementation of government policies on privatisation, implement the privatisation programme and implement specific privatisation proposals in accordance with the privatisation programme.
The authority shall be managed by a board consisting of a chairperson appointed by the President; the National Treasury Principal Secretary or a designated representative, and the Principal Secretary in the ministry for the time being responsible for matters relating to investment promotion or a designated representative.
Others will be the Attorney General or a designated representative; four other persons, not public officers, appointed by the Cabinet Secretary possessing relevant skills and competencies that may be required to achieve the objectives of the Act; and the managing director of the authority.
The draft Bill gives the National Treasury Cabinet Secretary and the Privatisation Authority board powers to approve the sale of SOEs. The CS will also be in charge of formulating the privatisation programme which specifies the public entities identified and approved for privatisation.
The proposed law eliminates Parliament from the decision-making on privatisation, moving away from the current framework that requires the Treasury CS to submit a report in the form of a sessional paper to the National Assembly for consideration of a privatisation proposal approved by the Cabinet. Currently, the CS and the board have the power to determine the fate of an entity to be privatised.
“Upon preparation of a privatisation proposal under section 25, the proposal shall be approved by the board with the concurrence of the Cabinet Secretary,” reads the draft.
The move has drawn criticism from political pundits who feel that matters of such public significance and touching on public entities should go through Parliament.
The methods of privatisation shall include, initial public offering of shares, sale of shares by public tendering, sale resulting from the exercise of pre-emptive rights, and such other method deemed fit by the authority with the approval of the Cabinet Secretary.
Any person, whether Kenyan or non-Kenyan, is eligible to participate in privatisation provided that nothing in the draft Bill affects the application of any other law that may impose restrictions on participation by non-Kenyans.
However, privatisation can also be challenged through appeals and objections if anybody is aggrieved by the determination of the authority on matters of privatisation.
With the deadline for public participation slated for February 7 at 5pm, Kenyans interested in public participation can write to the National Treasury PS or send an email to [email protected]
Public consultations will be held on Tuesday, January 31 at Starbucks Hotel & Restaurant Limited Ltd (Eldoret), Travellers Beach Hotel & Club (Mombasa), Kisumu Hotel (Maseno University), The White Rhino Hotel (Nyeri), Hiddig Hotels Nairobi Co. Ltd (Garissa), Maanzoni Lodge (Machakos) and the Kenyatta International Convention Centre on February 7.