How Kenya's parastatals may soon be behemoths

Kenya Industrial Estate (KIE) Managing Director Dr. Parmain ole Narikae (left) shows KIE Board chairperson Muthoni Kimani the awards they won.  [Jenipher Wachie, Standard]

The Privatisation Bill 2023 targeting select parastatals for sale must be lauded for moving swiftly to identify and streamline weaknesses that have paralysed operations at the Privatisation Commission. 

Stakeholders of organisations place varying demands upon key decisions before it. And whereas most are complimentary, others are in competition. Commercial enterprises will subordinate all other consideration in their quest to earn maximum returns of their investment for their shareholders and owners. They will frown upon attempts in providing continuity of employment whenever conflicted. Such is the challenge confronting the stalemate before the State and the Act would appear to have been crafted with the expediting-sale-outcome bias in mind. To stay agile, decisions must be timely, collaborative, trendy and financially efficiently. 

Pundits who have expressed misgivings over exclusion of Parliament in the new process need reminding of the fate of the public that the parastatals seek to serve. Customers being the ultimate source of shareholder value and whose satisfaction and delight is the ultimate source of long-term cash flow, must have their plight allocated premier status.

The failure by the Parastatal Commission to conclude further sales after 2008 is tied closely with Parliaments inability to deliver on their mandate of timely rendering of ratification decisions. In failing to discharge this fiduciary duty hence, parliament must own its share of blame in the mired process and see the wisdom by state in arriving at the decision at bypassing her. Evidently, the justification advanced by State on how it arrived at the choice of target parastatals should serve to reassure all that the Act was coined to serve the greater public good. 

Granted, the story of most public enterprises including hospitals, universities, training colleges and schools, research and administrative bodies are a mixed basket of good and great but mostly dismal performance in economic and financial terms. While some of these bodies are not mandated to turn a profit, net positive incomes are always desirable as they guarantee sustainability. The selected parastatals are all reportedly ailing financially.

The targeted parastatals all operate in sectors adequately served by our dynamic, vibrant and robust private sectors and so there is little risk of any void or supply chain friction that may arise from their pending sale. The conversation that the Act has triggered must not be allowed to mask targeted parastatal’s potential to soar and become corporate behemoths, powering & propelling Kenya’s economy. 

Safaricom and KCB are model examples of former public enterprises that recently joined this premier club. Accounting for close to two per cent of Kenya’s GDP, Sub Sahara’s largest corporate also doubles as Kenya’s highest direct and indirect private employer and recent export, having put their footprint in the expansive Ethiopian Telco market. 

Safaricom’s growth came from product innovations - MPesa, unique franchise channels that their competition hadn’t considered - agents, and rigorous optimisation driven by analytics and understanding of customers. It is possible to steer our privatisation candidates to soar to this level as regional behemoths.

The writer is an entrepreneur