Protect public interest during parastatals sale

Although parastatals have been an effective means through which to channel resources for the development and provision of public services, this is no longer necessarily the case.

Some have become conduits for the siphoning of public resources by crooked officials. However, some of the agencies still play a pivotal role in the provision of affordable essential services. Unlike the private sector, they are not driven purely by the profit motive and their scrapping could result in skyrocketing service charges.

While some parastatals operate effectively, justifying their existence, getting rid of the moribund ones is no longer a matter for mere debate: It should happen pronto.

If a Bill before Parliament is approved, the National Treasury Cabinet secretary will have more say in the sale of state firms. The Treasury chief will get more clout in President William Ruto’s plan to sell some parastatals and generate cash for the Exchequer.

Those struggling financially should be sold off to curb losses. They include several banks. The privatisation of state-owned enterprises (SOEs) has emerged as a means through which the proceeds from the sales will be channelled into the Consolidated Fund for budgetary spending.

Fiscal risk

The Treasury is said to be staring at a fiscal risk of Sh2.75 trillion should parastatals default on debts from both commercial and multilateral lenders. Extensive reforms, including privatisation and mergers, are needed to strengthen those that are still relevant.

However, the bid to remove parliamentary approval for the sale of parastatals does not augur well. It may be intended to ease transactions but could undermine the security of vital government assets and should, therefore, be reconsidered.

The sale is a good idea to raise funds for development and to boost the national debt repayment, which is a huge burden. However, it should be well regulated, hence the need for Cabinet and parliamentary endorsement. The proposal to turn the Privatisation Commission into the Privatisation Authority, under the National Treasury, is one way of giving more clout to the agency to effectively discharge its responsibilities.

To further streamline operations, parastatals that perform similar roles should be merged to curb duplication and wastage and enhance public sector efficiency.

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