State to ‘fast-track sale of 18 ailing parastatals’

The State will fast-track the privatisation of about 18 loss-making parastatals, Parliament heard on Monday.

Treasury Principal Secretary nominee Chris Kiptoo told MPs the government would reassess the performance of the State entities to bring in strategic investment.

“I read somewhere that there are 18 State-owned enterprises that are being reviewed because their liabilities far outweigh their assets. Some are candidates for privatisation,” Dr Kiptoo, the outgoing Environment PS, told lawmakers during his vetting.

President William Ruto last month said his Kenya Kwanza administration would offload several non-performing State-owned firms through the Nairobi Securities Exchange (NSE).

Dr Ruto said his government would bring to the bourse through initial public offerings (IPOs) between six and 10 companies, urging the private sector to also list at least five companies on the NSE.

Listing of additional shares of State corporations would end a six-year IPO drought at the NSE that has lasted since October 2015 when the Stanlib Fahari REIT was listed.

The last successful privatisation by the government was the Safaricom IPO in 2008, meaning that no State-owned firm was sold at the NSE during the 10-year tenure of former President Uhuru Kenyatta.

Former President Mwai Kibaki privatised six companies, including KenGen, Kenya Reinsurance, Safaricom and Mumias Sugar, through the NSE between 2003 and 2008.

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He sold Telkom Kenya shares through a strategic sale and leased out Kenya Railways Corporation through a concessionaire.

President Ruto has indicated that his government will raise financing for government projects through the Nairobi bourse as opposed to borrowing from external markets.

Proceeds from privatisation would earn the Ruto administration funds to meet budget shortfalls and reduce the burden on the exchequer, with a World Bank 2021 study estimating State corporations cost Kenya Sh532.2 billion in grants and subsidies.

Three of the dominant firms at the NSE — Safaricom, Equity and Co-operative Bank — came into the market during the IPO boom years of 2005 to 2009.

Their dominance has made it difficult for investors to measure the true performance of the bourse due to the companies’ outsized influence on key market indicators.