The government is proposing changes to the way state-owned firms are sold in order to shorten the approval process and give the Treasury more power.
The Privatization Bill 2023, which will replace the 2005 law, aims to give Treasury Cabinet Secretary Njuguna Ndung’u and the board of the Privatization Authority more authority in the sale of government-owned companies.
“Upon preparation of a privatisation proposal, the proposal shall be approved by the Board with the concurrence of the Cabinet Secretary,” the draft Privatisation Bill 2023 reads in part.
This will effectively bypass the National Assembly’s role in the privatisation of parastatals.
Currently, the Cabinet Secretary is required to submit a report in the form of a sessional paper on a privatisation proposal approved by the Cabinet to the National Assembly for consideration.
The report is then reviewed by a parliamentary committee before it is tabled in the National Assembly for approval.
Interestingly, the Privatization Bill 2023 will required to the approval of Parliament before being assented to by the president.
Under the new proposals, however, the Cabinet Secretary is expected to take on the mantle of the privatisation process, including identifying and determining which entities should be included in the programme.
The proposed exclusion of Parliament from approving the sale of state-owned firms has raised concerns among analysts.
Ken Gichinga, an economist at Mentoria Economics said, “I find it a bit strange given the privatisation process involves the conversion of public assets into private assets. I am surprised to see the process left entirely to the National Treasury which is part of the Executive.”
The government’s privatisation plan comes at a time of market volatility, with foreign investors exiting emerging markets for better returns in western markets due to high interest rates.
The government had previously targeted 26 firms for privatisation, including Kenya Pipeline Company and parts of Kenya Ports Authority (KPA), as well as hotels and stakes in several international hotel chains.
The last successful privatisation by the government was the Safaricom IPO in 2008.
During his reign, former President Mwai Kibaki privatised six companies, including KenGen, Kenya Reinsurance, Safaricom and Mumias Sugar, through the Nairobi Securities Exchange (NSE) between 2003 and 2008.
The government is now looking to surpass that number and sell more state-owned firms in the coming months and years.
In a briefing to the media on Tuesday, January 24, Trade CS Moses Kuria said that the he would surpass the targets given to him to facilitate the sale of at least three parastatals by June 2023.
“I expect to raise $10 billion by the end of the year in foreign direct investment from the current paltry $500 million. In fact, I may surpass my target…By end of the financial year June 2023, I will have privatised 3 state-owned enterprises,” Kuria stated.
He also added that the government was seeking to sell some public universities.
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