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Harsh economic times dominate debate on Privatization Bill 2023

Uncertainty of employees working in non-performing parastatals and prevailing economic conditions dominated a public participation workshop organized to discuss the proposed Privatization Bill 2023 held at the Nyeri White Rhino Hotel.

The one-day workshop that collected views from the public intends, among other things for the conversion of the Privatization Commission into an Authority.

The bill, if it sails through Parliament proposes the proposed Authority to provide a regulatory framework for the privatization of public entities including state corporations, especially those reeling under debts running into billions of shillings.

“I personally support the Bill but the timing is what I wonder whether it is appropriate considering the economic situation that we are in as a country. I propose that we give it time for the recovery of the economy so that we may have money in our pockets and avoid a scenario where we have two classes of citizens; those who have and those who don’t,” said Charles Wanjau, a tea farmer from Tetu in Nyeri.

Another Nyeri resident, Michael Mugamba requested the State to go slow on the plans to offload non-performing parastatals without putting to rest questions on the fate of employees working in such entities.

He noted that while the Bill may be appealing at face value owing to the fact that majority of the parastatals are currently in the red, a hasty move to sell them out without prior consideration of the fate of the existing staff may lead to suffering and pain akin to what transpired during the infamous IMF Structural Adjustment Programs of the 1990s.

“As the State plans these restructurings, we need to be assured about the fate of all those who will be affected by the process. Once an entity is passed to another proprietor, the danger of former employees being retrenched is real. We therefore need to be assured that such an occurrence will not be the case,” he pointed out.

Article 25(2) g, h of the Bill states that the proposal shall specify any recommendations for dealing with the employees directly affected by the proposed privatizations including any benefits they are entitled to and the benefits to be gained from the proposed changes.

In addition, article 18(2) states that the Treasury Cabinet Secretary shall take into consideration the need to avoid privatizations that may result in unregulated monopoly, the expected benefits to be gained from a proposed privatization and the sustainable development and protection of the economy.

But Rosemary Wairimu, a dairy farmer lauded the draft bill saying it might turn out to be the magic silver bullet that will save the country from pumping billions on loss-making public entities. Wairimu likened cash trapped parastatals to unproductive dairy cows whose only remedy is selling them for more high-yielding breeds.

“I am sure the government cannot privatize those State agencies that are doing well. They will privatize those which are not doing well. There is a need to sell off entities that are not performing and leave those that are profitable and are beneficial to the community,” she said.

By shedding off loss making parastatals, the Government intends to encourage more participation of the private sector in soaring up the economy by shifting the production and delivery of products and services from the public sector to the private sector.

In addition, the State hopes to generate additional revenue through compensation and also improve the infrastructure and the delivery of public services through the involvement of private capital and expertise.

Two years ago, a report by the National Treasury tabled at the National Assembly showed that over half of the parastatals in Kenya were operating at a loss.

According to the Consolidated National Government Investment Report for the 2019/2020 financial year, out of 247 State corporations, 127 were found to be in the red.

Ahead of the pack was Kenya Railways Corporation whose losses almost tripled from Sh 8.47 billion in 2019 to Sh 24.2 billion in 2022.

Others in the list include Kenya Broadcasting Corporation at Sh9.8 billion followed by Nzoia Sugar with loss of Sh3.48 billion.

By Samuel Maina and Alex Macharia

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