KenGen CEO Albert Mugo (right), and Kenya Power CEO Ben Chumo. The two chief executives have said they will heed President Uhuru Kenyatta’s directive to slash their salaries by 20 per cent. Photos/FILE
What you need to know:
A random survey by the Business Daily indicated that most parastatal CEOs are ready to have their pay cut, in what could make the public sector less attractive to highly qualified private sector professionals if it is upheld long into the future.
Chief executives of 262 state-owned firms in Kenya earn between Sh400,000 per month for lower echelon parastatals and Sh1.1 million for Category A State firms.
Chief executives of the two NSE-listed State Corporations have said they will heed President Uhuru Kenyatta’s directive to slash their salaries by 20 per cent, raising the possibility that they may find it hard to attract top-of-the-drawer managers that can maximise shareholder returns in future.
Kenya Electricity Generating Company (KenGen) chief executive Albert Mugo and his Kenya Power counterpart Ben Chumo said that they would comply with President Kenyatta’s directive which was issued to check the ballooning public wage bill.
KenGen and Kenya Power are both majority owned by the government, technically making them State Corporations which ideally are controlled by the executive.
But they are also owned by thousands of local and international investors who bought their shares on the Nairobi Securities Exchange (NSE) and expect optimal returns on their cash.
The President’s directive therefore raises a perennial dilemma that faces the quasi-public institutions that on the one hand benefit from State largesse but on the other suffer from government bureaucracy. “I’ll comply, he’s the head of state,” said Mr Chumo.
Financial analyst Robert Bunyi said that there are legal questions as to whether listed firms with government shareholding are parastatals or public companies.
There is also the constitutional question on whether the president can set salaries for public servants.
“If there is a permanent decrease in the salaries paid by public sector, then it will not be attractive to those from the private sector. There are, however, soft benefits escorted with public sector,” said Mr Bunyi.
A random survey by the Business Daily indicated that most parastatal CEOs are ready to have their pay cut, in what could make the public sector less attractive to highly qualified private sector professionals if it is upheld long into the future.
Salaries and Remuneration Commission chairperson Sarah Serem termed the pronouncement an “executive directive” whose implementation does not fall under the SRC, raising the Vision 2030 Secretariat director-general Wainaina Gituro said he was ready for the pay cut and is only waiting for an official communication to implement the directive.
“The government works through circulars. We are waiting for the head of Public Service to communicate when it will be effected,” said Prof Gituro.
Kenya Broadcasting Corporation managing director Waithaka Waihenya said: “This is something that I cannot contest; it is for the greater good of the nation and I hope everyone should follow suit.”
Postmaster general Enock Kinara said: “I am just waiting for the circular on how this is going to be implemented and I will do it. There is no question about it.”
Kenya Year Book chief executive Dennis Chebitwey said that he would comply but called on government to stem wastage of public funds through unnecessary spending on travel and per diems.
“I don’t have any problem with the pay cut, however, the government needs to go deeper and reduce wastage that arises with events such as seminars, trainings and even paying board members seconded from the ministries.”
Chief executives of 262 state-owned firms in Kenya earn between Sh400,000 per month for lower echelon parastatals and Sh1.1 million for Category A State firms.
