The era of State corporations is gone; go ahead and sell them

Water fountain around Mzee Jomo Kenyatta monument outside KICC and Parliament Buildings during the African Climate Summit on September 06, 2023. [Stafford Ondego, Standard]

My neighbour has had three cows that do not produce milk, but he has employed a herdsboy whom he pays Sh8,000 monthly. Each of the three cows is worth about Sh20,000. Last year, two of the cows gave birth, so there are now five cows. Even if we value each cow still at Sh20,000, the total wealth in that home is Sh100,000.

However, he does not realise that he pumped Sh96,000 (8000x12) to cater for his Sh100,000 wealth. Asked to sell the cows, he said he needed the cows at home as a sign of wealth and pride. Call him irrational, but that's what Kenyans are thinking when it comes to privatisation of State-owned corporations.

The President's interview early this week rekindled the debate on the government's plan to privatise 350 corporations. Even after Dr Ruto gave a breakdown of how taxpayers lose billions of shillings funding the corporations, the math still doesn't make sense to most Kenyans.

No wonder private companies, even with limited budgets and resources, tend to fare well compared to State corporations. Yet, we sink billions of shilling into entities that bring no profits. Walk to any state-owned corporation, and you will meet the actual definition of wood decay, rot and surface fungi, unmotivated employees and a sluggish atmosphere.

Government corporations are meant to regulate the market and tame private monopolies. However, as the government goes down the path of privatisation, there should be a framework for taming private monopolies. Unregulated monopolies misuse their power and can deter the growth of competitor companies.

For example, Kenya Power is a partly privatised with 50.1 per cent government shareholding while private investors own 49.9 per cent of its stake. This monopoly has, however, shown us things—they switch power when they want, do costing at their rates and Kenyans have no recourse.

However, since State corporations are outdated and a burden, controlling private monopolies will be cheaper than resuscitating public monopolies. So, in a competitive capitalist system like Kenya, State corporations have outlived their time. The downside of the capitalist system is that everyone thinks about their welfare and no one else’s. That is why government corporations are non-starters marred in nepotism, tribalism and ethnicity in their operations.

Moreover, government corporations are sites for bureaucracy, incompetence, wastage of resources, mismanagement, grant corruption and irresponsibility of directors and employees.

Under capitalism, systems run successfully with little government interference. In Kenya, where we blame the government for everything, including our lunch, privatising state-owned companies will not only improve the delivery of services and infrastructure but will reduce demand for government resources and, above all, is a way of generating revenues for the government.

Currently, the government relies solely on taxes to operate. If the government can give away corporations that gobble up money instead of generating revenue, that should be welcomed. Generating additional government revenues and improving infrastructure and service delivery should be the reason we must support the privatisation of government corporations.

Politics aside, we all agree that service delivery at State corporations is lethargic—no Kenyan wishes to be served in a public institution. The point is that the era of State corporations is gone, and Kenya must massively give up stalled State corporations to private developers. Experts in wealth creation, whether for individuals or a nation, tell us that having money work for us is the best way of achieving financial goals.

We all know that the government pumps billions of taxpayers' money into some of these corporations every year, and the cycle never ends. The question is, how much of our money do we get from these corporations apart from misuse of capital, disorganisation, and political interference, to mention but a few?

As Kenyans fear the resultant private monopolies, how do we tame the higher costs that taxpayers incur to sustain the already existing public monopolies in the name of government corporations?

Dr Ndonye is a senior lecturer, Department of Mass Communication, Kabarak University