Kenya: Ruto’s administration seeks to privatize state-owned agencies

Kenya’s new administration under the leadership of President William Ruto seeks to privatize 10 state-owned parastatals in the next year. This move is aimed at boosting their performance and increasing the profitability of these state agencies.

The 10 state-owned enterprises will be listed at the Nairobi Securities Exchange (NSE) in the next 12 months, a move to re-awaken the country's capital market.

Speaking while at the bell-ringing ceremony to mark the launch of the enhanced NSE Market Place, President Ruto said that government-owned enterprises whose offloading is behind schedule will be sold off to private investors.

"This administration will revitalize the capital markets by the privatization of State-owned enterprises especially those within the agricultural, energy, and financial sectors. We are doing all these to ensure that our local firms can fund local projects and create value for their investors.” Affirms President Ruto.

According to NSE -chairman Kiprono Kittony the NSE is a great avenue for the government to borrow from hence reducing the overdependent on expensive external loans that have pushed up the country's public debt to KSH 8.6 trillion.

Kenya’s state-owned companies set for listing at NSE

• Sony Sugar
• Nzoia Sugar
• Muhoroni Sugar
• Miwani Sugar
• Chemelil sugar
• Kenya Seed Company Limited
• Kenya Pipeline Company
• Kenya Ports Authority
• Kenya Reinsurance Corporation Limited (Kenya Re)
• Kenya Meat Commission
• Development Bank of Kenya
• Kenya Tourism Development Corporation

The head of the state’s promise comes in the backdrop of a similar one by his predecessor Uhuru Kenyatta who had lined up 26 companies for privatization.

Mr. Gideon Muriuki, Managing Director, of Co-operative Bank of Kenya which is a state-owned lender has also voiced his concern challenging the new administration to tap into the country's cooperative movement.

“Its no doubt that our country's over 15,000 cooperative movements is the strongest in the African continent which is a key player in the economy, controlling about 43 percent of our GDP.” Mr. Gideon says.

On the issue of taxation that has continued to hinder most private firms from being listed at the NSE, the president said that he will ensure a better taxation policy is in place.

“My government is willing to work with you so that we can remove those impediments. We are ready to forgive some sins, let me put it that way so that we can all move together."

Both the World Bank and the IMF have been pushing for the sale of loss-making state agencies. These two global lenders have previously suggested the need for the merger of state-owned agencies to reduce the duplicating roles to plug budgetary deficits.

Kenya has close to 400 State agencies, half of them being regulatory bodies with an annual expenditure of KSH 1.3 trillion which represents 14 percent of the GDP, according to the National Treasury.

The restructuring of state agencies as part of IMF's conditions for access to credit facilities in 2021, among them a $264 million loan for budgetary support during the Covid-19 pandemic period.

IMF “Reforms are being undertaken to improve government effectiveness and proactively manage fiscal risks.”

The Outgoing National Treasury CS Ukur Yatani has been keen to fold agencies that have remained on the exchequer's bail-out list year in and year out, with those with duplicating roles being merged to reduce the wastage of resources.

GAROWE ONLINE