Cabinet approves Bill that gives CS power to privatise state firms without MPs' nod

ruto cabinet meeting state house

President William Ruto chairs a past cabinet meeting at State House, Nairobi. 

Photo credit: File | PSC

What you need to know:

  • The approval means the government-sponsored Bill will soon be tabled as it seeks to shorten the process of selling parastatals.
  • Should the Bill be passed, Treasury CS Njuguna Ndung’u will be responsible for formulation and development of the government’s privatisation programme subject to Cabinet approval.
  • Cabinet has also approved extradition treaties with China and Italy.

The Cabinet on Tuesday approved the Privatisation Bill, 2023, which will strip MPs of their oversight role in the sale of state-owned corporations.

The approval means the government-sponsored Bill will soon be tabled by National Assembly Majority Leader Kimani Ichungw’ah as the government seeks to shorten the process of selling parastatals.

Some of the corporations that the government has earmarked for privatisation include Chemelil Sugar, South Nyanza Sugar, Kabarnet Hotel, Mt Elgon Lodge, Golf Hotel and Nzoia Sugar. Others are Miwani Sugar, Sunset Hotel Kisumu, Kenya Safari Lodges and Hotels, Consolidated Bank, Development Bank of Kenya, Agro-Chemical and Food Company, Kenya Wine Agencies, Kenya Meat Commission and public universities.

The Bill, which will repeal the Privatisation Act, 2005, gives power to the National Treasury to privatise public-owned enterprises without the approvals of Parliament.

“This ushers in a more facilitative and non-inhibiting legal and policy framework that will oversee privatisation in the country,” said the Cabinet. It added that the sale of non-strategic, non-performing public entities will help to finance upgrade of infrastructure and improve delivery of services to Kenyans. It also noted that privatisation will tame appetite for government resources.

The Bill also seeks to turn the Privatisation Commission into a parastatal that will be called the Privatisation Authority, which will be domiciled at the Treasury.

Privatisation of parastatals has emerged as a priority in President William Ruto’s fiscal consolidation plan, with proceeds from the sales to mainly be deposited into the Consolidated Fund for budgetary spending.

Should the Bill be passed, Treasury CS Njuguna Ndung’u will be responsible for formulation and development of the government’s privatisation programme subject to Cabinet approval, a mandate that is currently held by the commission. The CS will pick parastatals to be privatised before the authority takes over to implement the sale.

“The Cabinet Secretary shall identify and determine the entities to be included in the privatisation programme,” says the Bill.

It states that the privatisation drive will help shift production and delivery of products and services to the private sector from the public sector, improve infrastructure and delivery of public services through involvement of private capital and expertise, and reduce dependence of struggling parastatals on government bailouts.

The sales will also generate revenues for the government, reduce conflicts between the public sector’s regulatory functions and commercial functions, and develop Kenya’s capital markets, it states.

Saddled with huge debts

The Azimio la Umoja One Kenya Coalition has rejected the planned privatisation of public universities by the Kenya Kwanza administration. Trade and Investment Cabinet Secretary Moses Kuria said that the government had already identified investors from Indonesia and the United States who were ready to invest millions of shillings in public universities that are currently saddled with huge debts.

In a January statement, National Assembly Minority Leader Opiyo Wandayi claimed that the privatisation of the universities is a scheme by some Kenya Kwanza politicians to amass wealth because they will emerge as the highest bidders.

“Our public universities sit on massive resources, particularly land and infrastructure. Someone may be eyeing these resources under the guise of fixing the financial problems facing the institutions,” said Mr Wandayi.

Drought intervention 

The Cabinet also allocated Sh23.96 billion for the April to October 2023 period for interventions in food assistance, water, livestock and peace and security. It noted that the drought situation has been complicated by the rising insecurity in Turkana, Samburu, Baringo, West Pokot, Laikipia, Marsabit, Isiolo and Garissa counties. 

Further, the Cabinet granted approval for the government to pursue a negotiated commercial settlement for the commercial contracts and financing agreements for the Arror, Kimwarer and Itare dams.

It also approved the appropriate restructuring of the government’s outstanding debt service obligations under the financing agreements for the three dams.

Extradition treaties ratified

The dispatch from cabinet also announced approval of extradition treaties between Kenya and China and Italy. This means that Kenyans who break the law in these countries will now be brought home for trial and/or sentencing. The reverse is also true of Italians or Chinese nationals who break the law in Kenya.