KICC, KPC, other parastatals under William Ruto’s privatisation plan: Reasons, benefits for privatising

The government has announced plans to privatise 11 parastatals, a move that saw Kenyans express their displeasure with the decision, especially the sale of the Kenyatta International Convention Centre (KICC).

Kenyans took to social media, showing their discontent with selling a landmark like the KICC.

However, when the government is spending billions to keep parastatals running, privatisation becomes a desirable option. According to the Privatisation Authority, past governments have privatized state-owned entities before, including KenGen, Kenya Railways, and Mumias Sugar Company.

The privatization of KICC and other major parastatals like the Kenya Pipeline Company (KPC) and Kenya Seed Company is intended to free up funds that the government uses to support their operations. Privatisation also intends to enhance efficiency and competitiveness in parastatals.

According to the People Daily, in July 2021, the International Monetary Fund (IMF) asked the National Treasury to limit its involvement in supporting state-owned enterprises as part of its new financing conditions, saying they posed a huge financial risk to the nation.

Other parastatals targeted in the current privatisation plan include New KCC, National Oil Corporation of Kenya, Kenya Literature Bureau (KLB), and Mwea Rice Mills.

Benefits of privatisation

According to a report cited by the Privatisation Commission, parastatals in the country have had challenges that include corruption, debt, and inefficiencies.

With privatization, an establishment becomes accountable to private shareholders, which means it has to be efficient and ensure profits are achieved.

Moreover, a huge part of Kenya’s budget goes to paying wages. A private company works to minimize costs, which includes checking the workforce size, to lower the cost of operation and foster profitability. One problem government institutions have is bureaucracy, which can impede efficiency and proper administration.

Nevertheless, experts have expressed concerns over the privatisation of entities like the Kenya Seed Company saying it should be under the government to ensure food security. Others also argue that the Kenya Pipeline should remain under the state, considering its importance to the economy.