What is the logic in trying to merge the Kenya Institute of Research and Development Institute (Kirdi) — a research body — with the Kenya Industrial Estates; a small and medium-sized enterprise agency whose main mandate is to lend and incubate small-scale manufacturers?
Why would you want to merge the National Cereals and Produce Board (NCPB), whose principal mandate is price stabilisation and to play the role of buyer of last resort for maize farmers, and the moribund Kenya National Trading Corporation (KNTC)?
The latter's responsibility has over the years been reduced to collecting rent from leasing warehouses, built by the government in the days of yore and at the height of the ancient regime of price controls and commodity marketing boards.
When did we agree and reach a consensus as a society that the idea about development authorities has run out of tarmac, and that we should get rid of these institutions altogether?
This idea of merging parastatals needs to be subjected to a plebiscite. We must have a fresh national conversation around the momentous changes and reforms we want to implement in this key sector of the economy.
I have been following and tracking attempts by successive governments to reform the state-owned enterprises sector since publication in 1982 of the recommendations of the seminal Working Party on Parastatals Reform that was led by the former governor of the Central Bank of Kenya; Philip Ndegwa (now late).
I still believe that the most comprehensive and well thought out policies of reforming this sector are contained in the report by the presidential task force on parastatal reform committee of 2014, that was co-chaired by Mr Abdikadir Mohammed and Isaac Awuondo.
Indeed; most of the ideas underpinning the measures announced by the Cabinet this week have their origins in the recommendations of this blue-ribbon task force.
Reforming the parastatals sector in this country requires a great deal of political will, because appointing cronies to plum jobs in this sector is how the political elite get legitimacy.
When you disrupt this sector; you undermine the basis of legitimacy and loyalty of the president. Which is why Influential groups within government and individuals with interest in maintaining the status quo, will always come up with clever manoeuvres to stall, stop, reverse, or put the suggested reforms off track.
Where attempts have been made to implement the recommendations of Abdikadir’s blue-ribbon committee; you will invariably find that what is proposed and implemented is very different from the original proposal.
We woke up one morning in 2021 to learn that then President Uhuru Kenyatta had issued an executive order to establish a new parastatal called the Kenya Transport and Logistics Network.
Mr Kenyatta created a powerful super agency by expanding the mandate of the Industrial Commercial and Development Corporation (ICDC) and by bringing the large and strategic parastatals such the Kenya Ports Authority, Kenya Railways Corporation, and Kenya Pipeline Company under the new super agency led by Mr John Ngumi.
Then there was the time when; without consulting anybody; he decided to transfer control of the Kenya Meat Commission to the Department of Defence. We woke one morning to hear that the National Treasury had written to the state-owned Tourist Finance Corporation (TFC) — formerly Kenya Tourist Development Corporation (KTDC) — directing it to immediately freeze its operations.
The Cabinet had made a decision that the operations of TFC and two other parastatals — the ICDC and IDB Capital (formerly Industrial Bank of Kenya) — be merged to create the Kenya Development Corporation.
By the way; the ambition to merge these three parastatals originated from Abdikadir’s committee that recommended establishment of a large cross-cutting development bank of the ilk of the Development Bank of South Africa.
Urgent action is needed to restore the financial viability of the bigger zombies with hundreds of employees in their workforces. Today, 3,000 employees of the Postal Corporation of Kenya (PCK) have not been paid a salary for many months.
Fresh bolder thinking and action is needed to revive entities such as Consolidated Bank of Kenya, Post Bank, Development Bank of Kenya. Nearly, all regional development authorities are zombies that are teetering towards insolvency. The reason most of these entities are in financial straits is lack of foresight and half-hearted implementation of reforms.
Today, the government sits on massive wealth in ownership of listed companies, including Safaricom, Ken Gen, East Africa Portland, Kenya Airways and many others.
The ambition in the recommendations of Abdikadir-led presidential task force was to establish a government investment corporation in the image of Singapore’s Tamasek Holdings, South Africa’s Public Investment Corporation or Khazana Nationale of Malaysia- to manage and take control of such government-owned commercial corporations.
In the matter of reforming parastatals, let's set our ambitions higher.
The writer is the former managing editor for The EastAfrican
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