Fruits of privatisation sour as most divestitures fail to excite

Privatisation of Kenya’s State entities was a noble idea. It was meant to make firms more efficient and wean them off political interference and reliance on taxpayers sweat. The companies were expected to swim in huge profit under private hands. However, the mission was exploited by greed, inefficiency and mismanagement by those bestowed the duty. This saw some of the divested firms milked dry by those who were supposed to midwife the process – leaving them worse off than they were at the time of disposal. Even worse is that in some cases, taxpayers have continued to pay for the misdeeds of these private shareholders and directors. Historian and journalist Martin Meredith wrote in his book, A history of the Continent after Independence, that after resisting pressure from the West to have dysfunctional public enterprises privatised, African leaders, after some thinking had a Eureka moment and dropped their hard-line positions. “Initially hostile to the idea of privatising parastatal organisations which provided them with a major source of patronage, they came to realise that the business of privatisation itself could be used as a means of patronage,” says Meredith. And so, beginning in the early 90s up to the mid 2000s, Kenya joined other African countries in aggressively disposing of moribund State corporations in what was aimed at making them efficient and increase the country’s output. Kenya Airways, one of the companies that were privatised, might soon return to the national government’s fold. Last week, Members of Parliament accepted the proposal to have the airline nationalised as a means to get it out of turbulence. While the privatisation programme has yielded a number of success stories, there are a few special cases that might have fallen victim to what Meredith described as “crony capitalism.” Samuel Nyandemo, an Economics lecturer at the University of Nairobi, says that while privatisation is good – helping ailing companies and thus leaving the economy more vibrant – Kenya’s approach and by many other African countries has been wrong. “The only place which has successfully done that (privatisation) is Ghana,” he says. “In other African countries, privatisation has been pushed to enrich the chosen few who are supporting the government of the day.” Kenya’s privatisation programme was carried out between 1992 and 2002 at the behest of the World Bank and the International Monetary Fund (IMF). It had mixed results. Some public enterprises that were privatised […]

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