Kenyan president signs privatization bill into law

A recent bill signed into law in Kenya is set to accelerate the privatization of underperforming state-owned entities in the country. The move has stirred up a mix of reactions, with some hailing it as a necessary step towards efficiency and others expressing concerns about potential drawbacks and implications for the private sector. In a recent interview with CNBC Africa, Odhiambo Ramogi, CEO of Elim Capital, highlighted some key points and issues surrounding the new law. The bill aims to streamline the process of offloading government-held shares in certain companies and state corporations, with the goal of reducing bureaucratic hurdles and improving efficiency in privatization. However, critics argue that the bill's scope is too narrow, focusing solely on shares and overlooking other valuable assets held by the government, such as natural resources and electronic assets. This omission raises questions about the transparency and fairness of the privatization process. One major criticism of the bill is the lack of clear provisions for local participation and the potential for abuse of power by the cabinet secretary for finance. The bill grants extensive authority to the cabinet secretary, sidelining parliamentary oversight and raising concerns about transparency and accountability. Additionally, the bill fails to establish boundaries or restrictions on which state entities can be privatized, leaving room for wide-ranging and potentially controversial decisions. Ramogi underscored the need for caution and thorough consideration in the privatization process, warning against rushed or ill-advised moves that could have far-reaching consequences. He emphasized that privatization alone does not guarantee improved performance, as success ultimately hinges on effective management rather than ownership status. While the government aims to revamp struggling parastatals through privatization, Ramogi cautioned against oversimplifying the complex challenges facing these entities. He pointed to examples of previously privatized companies in Kenya that continue to underperform, highlighting the nuanced factors at play in their success or failure. Ramogi also shed light on specific state-owned entities that may be targets for privatization under the new law, including the port of Mombasa, Kenya Railways Corporation, and Kenya Pipeline. These highly valuable assets have attracted keen interest from investors eyeing privatization opportunities, despite existing debates over the efficacy of privatizing key infrastructure and utility sectors. The president's recent remarks on the potential privatization of the sugar industry have sparked further controversy, with concerns raised about the impact on agricultural sectors and the complex interplay between national and devolved responsibilities. As the government pushes forward with its privatization agenda, stakeholders across various sectors are closely monitoring the developments and engaging in debates on the merits and challenges of the new law. The push for privatization in Kenya reflects broader regional and global trends toward privatizing state-owned enterprises and reevaluating the role of government in economic activities. With diverging opinions and interests at play, the path ahead for privatization in Kenya remains a complex and contentious issue, requiring careful navigation and robust dialogue among all involved parties.