If we remove privatisation from parliamentary oversight as is being proposed by the new administration of President William Ruto, we will have set the stage for corruption and more scandals in the sector.
Where has this madcap idea of disbanding the Privatisation Commission (PIC) and replacing it with yet another bureaucracy, an ‘authority’ instead of a ‘commission’, come from? What’s in a name?
If you don’t expose the privatisation programme to proper oversight by independent institutions, you will end up with corruption. I say so from the vantage point of a journalist who has been reporting and commenting on privatisation issues from the very inception of the programme in 1992—when John Simba and George Mitine were in charge.
At inception, the process was under three institutions, two of which had rather long names: The Executive Secretariat and Technical Unit, better known by the acronym ESTU, and the Department of Government Investments and Public Enterprises (DGIPE), which was domiciled at the National Treasury Building.
The latter, under Mr Simba, was in charge of selling non-strategic parastatals while Mr Mitine, who doubled as the Investment secretary, was in charge of the restructuring of the large strategic parastatals. The third outfit in the equation was a committee of the Cabinet known as the Parastatal Reform Committee.
As I look back, I am convinced that the reason we had too many privatisation scandals is that we went into selling public assets with neither a privatisation law nor a working and effective oversight regime. Everything was based on a policy paper that was published in July 1992 but whose contents had no force in law.
We debated whether it was right to go into privatisation without a comprehensive legal framework to guide the process but the argument against the necessity for a legal framework carried the day after the World Bank advised the government that such a law was not necessary.
By the way, all these outfits running privatisation were all funded by the World Bank. This is why, when the credit expired in 2000, ESTU was disbanded and the job of steering privatisation reverted to the office of the Investment secretary at the National Treasury and the Cabinet committee. PIC and the legal framework came much later in 2005.
The history I have narrated here may not be conclusive. But it is a chronicle by a scribe—a fly on the wall—who was always there watching events, interacting and engaging with government privatisation officials, attending briefings with representatives of the lending institutions who were funding the programme and conducting interviews with transaction lawyers and advisers.
Turned us into cynics
As young economic and business journalists just out of university, we were all believers in the Washington Consensus: Privatisation, liberalisation and deregulation. The mantra at that time was that the government had no business in business.
But after years of reporting and watching as the programme was rolled out and deals were closed, the experience has turned us into cynics. If you asked me today to describe privatisation, I would say it’s the consequence of the state’s lack of nerve and authority to be held accountable for making difficult decisions.
Whenever I see the government planning to sell a public company in the name of privatisation, I see responsibility aversion—an attempt to outsource and transfer responsibility and duties to the private sector. I see laziness.
At the inception of the programme, many parastatals were sold to well-connected individuals for paltry sums. I still remember the shenanigans that happened when Strive Masiyiwa tried to buy Telkom Kenya in 2002.
During the auction of the first GSM licence, we sold that valuable national asset to a group fronted by a local oligarch for $55 million when Orascom, of Egypt, had offered $90 million.
KenGen is touted as an example of a successful privatisation. Yet it has only helped private parties who own the 30 per cent float to squat on public assets and earn handsome dividends at the expense of the taxpayer who has incurred billions of shillings in guaranteed loans for geothermal development and the building of power stations.
I recently came across details on multi-billion-shilling geothermal well drilling contracts between the Ministry of Energy and the Great Wall Company, of China.
I have also looked at the external debt register to see how much we have borrowed from China Exim to fund the drilling of these geothermal wells. Today, the single largest private shareholder is PIC, of South Africa, which is owned by civil servants from that country.
It was a big mistake to privatise these large and profitable businesses. Let us not tinker with the existing legal framework for privatisation. Let us go back to the idea of creating the proposed Government Investment Corporation in the image of Tamasek, of Malaysia, as was proposed by the Presidential Task Force of 2104.
