By Brian Okoth
The Kenyan government has attracted criticism from its citizens over its proposal to put on sale 11 state corporations in the first phase of privatising about 35 parastatals.
Finance Minister Njuguna Ndung'u said in an official government statement that he considered several factors while settling on the 11 state corporations.
Among the considerations were the "strategic nature" of the public entity to be privatised, the need to avoid privatisation that may "result in unregulated monopoly", the need to avoid a privatisation that may "accord the new owners special protection", the need to "reduce budget drain" on government's resources, and the "expected benefits to be gained" from a proposed privatisation.
The state companies listed by the Kenyan government for sale include oil distributor the Kenya Pipeline Company (KPC), school books publisher the Kenya Literature Bureau (KLB), oil seller the National Oil Corporation of Kenya (NOCK) and the Kenya Seed Company.
Storm over KICC's proposed sale
Others are the Kenyatta International Convention Centre (KICC), Mwea Rice Mills, Western Kenya Rice Mills, the New Kenya Cooperative Creameries (NKCC), Numerical Machining Complex, Vehicle Manufacturers Limited and textile firm Rivatex East Africa Limited.
The parastatals whose proposed sale have attracted the highest criticism include the KICC; an iconic international conference centre in the capital Nairobi, the profitable Kenya Pipeline Company, the sensitive Kenya Seed Company and the Kenya Literature Bureau.
Nairobi Senator Edwin Sifuna challenged the proposed sale of KICC, saying a referendum should be held to consider Kenyans' opinion on the matter.
Billow Kerow, the former senator of northern Kenya county of Mandera, said on X social media platform: "The Kenya Pipeline Company is highly profitable. The objective should be to sell an entity that is a financial burden to the Exchequer. The proposed privatisation of Kenya Pipeline is curious, to say the least."
Opposition leader Raila Odinga has threatened to lead protests against privatisation of state firms if the government does not rescind the plan.
'Better management'
Justifying the proposed sale of the key corporations, Ndung'u said their privatisation would allow for better management of the firms, and reduce a burden on the Kenyan taxpayers.
KICC, which the minister admitted was profitable, has been proposed for sale to "generate additional revenue for the government" and "reduce the demand for exchequer support."
On the highly profitable Kenya Pipeline Company, he said selling it will "generate additional revenue for the government, will encourage more private sector participation hence improve efficiency and competition, and will attract private sector capital, investments and expertise, and offer an opportunity for expansion of the oil and gas pipeline infrastructure to unserved regions."
"KPC is a stable, good performing company, and its financial and operational performance has been good, making profits over the years," Ndung'u said.
'Mature sector'
On the Kenya Seed Company, whose proposed privatisation has been opposed by some due to the sensitivity of access to regulated seeds, the minister said the firm's privatisation will "generate additional revenue for government."
On the Kenya Literature Bureau, which publishes text books used in schools in the country, Ndung'u said the corporation has been proposed for sale because it "operates in a mature sector served by various private companies" and its privatisation will "generate additional revenue to the government."
The other state corporations – National Oil, Numerical Machining, Vehicle Manufactures, Rivatex and Western Kenya Rice Mills – were proposed for sale due to their "loss-making" nature, while Mwea Rice Mills and the profitable milk processor the New Kenya Cooperative Creameries have been marked for privatisation to "attract capital investments and expertise from the private sector."
Kenyans have been invited to submit their opinions on the proposed sale of the 11 parastatals by December 11.
Public participation venues
Citizens in the capital Nairobi will submit their opinions at the Nairobi Technical Training Institute on December 11 between 9am and 1pm local time.
Those in the coastal city of Mombasa will give their views at the Kenya Coast National Polytechnic on the same date and same time.
The same applies to residents of the Western Kenyan city of Kisumu, who will submit their views at the Kisumu National Polytechnic.
In Kenya's fourth city, Nakuru, they will give their views at the Kenya Industrial Training Institute.
Change of law
Leading telecommunications company Safaricom was the last to be privatised by the Kenyan government in 2008, when a 25% stake was put on sale.
In October 2023, President William Ruto's administration revised the privatisation law, making the process of selling state companies easier.
Previously (between 2005 and October 2023), only the Privatisation Commission could initiate the sale of state firms, but the new law now allows a finance minister to mark state corporations for sale, and seek parliament's approval.
Privatisation of state-owned companies is not new. Before the 1980s, governments world-over increased the scope of their activities, assuming tasks that previously belonged to the private sector. The functions included building highways and banking.
Brief history of privatisation
In the 1980s, governments in Europe and America started drawing back on privatisation. About a decade later, many state-owned companies were sold to the private sector.
Developing economies also joined the privatisation fray, though with the main aim of raising revenue to support government's operations.
Privatisation occurs when a government sells a state corporation to a private buyer.
It generally helps governments save money and increase efficiency, given the buyer would take over the company with its assets, including the staff members, and cut out any form of bureaucracy.
Services that 'should not be privatised'
Critics of privatisation say that senior government officials might abuse the process by selling state-owned companies to extremely wealthy people, thereby concentrating key service functions in the hands of a few individuals better known internationally as oligarchs.
Others say privatisation of state firms could be a forced process by international lenders that give such conditions before extending credit to nations in need.
There are certain services that should not be privatised, given their sensitivity. The services include police and military functions, healthcare, electricity, water, and sanitation.
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