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Parastatals Kenya wants to privatise 26 parastatals as it moves to raise capital to supplement National Budget deficit, currently standing at $5.799 billion

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The National Bank of Kenya, Kenya Pipeline Company and the Eldoret Container Terminal are just but a few parastatals set to be privatised.

play Kenya Pipeline Company set to be privatised. (mwakilishi.)

 

  • Kenya has a national budget deficit, which currently stands at Sh579.9 billion.
  • In the commission’s approved privatisation programme, 26 companies are set to be privatised, among them being the National Bank of Kenya, Kenya Pipeline Company and the Eldoret Container Terminal.

Close to 30 Kenyan state-owned companies are set to be privatised as the government moves to offset them after years of loss making in order to raise some much needed revenue.

The Privatisation Commission of Kenya which will oversee the privatisation of the state-owned entities has said the sale is informed by the need to raise capital to supplement the National Budget deficit, which currently stands at Sh579.9 billion ($5.799 billion)

play President Uhuru Kenyatta. (standardmedia.)

 

In the commission’s approved privatisation programme, 26 companies are set to be privatised, among them being the National Bank of Kenya, Kenya Pipeline Company and the Eldoret Container Terminal, belonging to Kenya Ports Authority.

Chemelil Sugar Company and the Kenya Meat Commission, are also  facing a number of challenges arising from operational inefficiencies and it is not yet clear if they have also been lined up for grabs.

play National Bank of Kenya (Daily Nation)

 

The privatization is expected to reduce the government expenditure by bringing in private capital as well as improve efficiency in governance and operation of these entities.

According to Kenya’s 2015-16 audit report on state firms, the auditor general highlighted that at least 36 parastatals were insolvent, and would require collective capital injection of Sh118.7 billion to stay afloat.

The 26 parastatals will be part of a long-term initiative to reduce the total state-owned entities, from the current 262 to 187. The Privatisation Commission has already laid out a number of secondary objectives for the sale of each entity, with some of them including improvement in governance, enhancing growth of the companies, as well as guaranteeing continued existence of these entities.

play Eldoret Container Terminal, belonging to Kenya Ports Authority is set to be privatised. (IHS Fairplay)

Kenya is not a stranger in selling off its state entities and as always resorted to the mechanism whenever the going has gotten tough.

Historically, the privatisation of state-owned corporations have seen many of these companies turn around their operations, with an example of Telkom Kenya, which, before government sale of 51% stake to French mobile operator, Orange, was facing risk of closure, but has now transformed, with Helios buying Orange’s entire stake in 2015.

It is expected that the entities up for privatisation will chart this same path.

play Kenya Meat Commission (Facebook)

Similarly, State Owned Enterprises, in Kenya have always generated significant interest in the market, attracting a good number of private companies to list immediately after their Initial public offering (IPO), something the government hopes to ride on.

The listing of Kenya Commercial Bank, Kenya largest bank by assets in 1988 for instance, immediately attracted the listing of Total Oil Company, Standard Chartered Bank and Nation Printers.

The Privatisation Commission has disclosed that there are initial talks with a number of foreign investors who are interested in acquiring these entities. The Commission has however not disclosed how much is expected to be raised from the sale of these entities.