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Kenyans will have to wait longer than anticipated to scrap or merge poorly performing state-owned enterprises that have become a burden to the taxpayers.
A presidential taskforce recommended five years ago that such corporations be scrapped or be lumped together to save the economy from excessive financial haemorrhage.
President Uhuru Kenyatta directed that the recommendations on the parastatal reforms be implemented within three months after he received the report in November 2013.
But wrangles, lack of political will and National Treasury’s reluctance to take the lead in pushing through the reforms have stalled the process.
The Presidential Taskforce on Parastatal Reforms (PTPRs) was a 10-member team co-chaired by former adviser on constitutional and legislative affairs in the Office of the President Abdikadir Mohamed and Commercial Bank of Africa Chief Executive Isaac Awuondo.
Mr Mohamed said that institutional infighting, lack of political will and National Treasury’s intransigence have combined to block the reforms, which could save the economy millions of dollars.
Mr Mohamed who also acted as the co-chair of the said National Treasury has refused to let go of some corporations.
“The biggest problem was National Treasury, which wants to retain control and it is not delivering. They sit in every board, approve every budget, but they don’t take responsibility for the losses and failures of these institutions,” said Mr Mohamed. National Treasury Cabinet Secretary Henry Rotich did not respond to our questions by press time.
Kenya has been forced to bail out several struggling parastatals such as Kenya Power, Uchumi Supermarkets, Telkom Kenya, Mumias Sugar Company, Kenya Meat Commission and Kenya Broadcasting Corporation.
In 2014, the Government Owned Entities (GOE) Bill and the National Sovereign Wealth Fund Bill were drafted to facilitate the mergers but they are yet to be debated and passed.
After the drafting, the Kenya Law Reform Commission (KLRC) faulted the government for trying to override the Company and Insolvent Act.
According to the commission, any sustainable reforms and restructuring of private and public corporations in Kenya could be successfully achieved through the Act.
The GOE draft proposes the incorporation of commercial entities under the Companies Act while on the other hand assuming itself as a law superior to the Companies Act or any other law enacted by parliament to regulate the operations corporate entities.
“By superimposing the GOE over the Companies Act or any other related law, the drafters commit the same sin for which they have condemned the authors of State Corporations Act ,” said KLRC. “They create a multiplicity of laws, both under private and public law, through which commercial companies, state agencies, public universities and research institutions will be required to navigate.”
It released its report in November 2013 and recommended that parastatals be reduced from 262 to 187 of which a total of 42 parastatals — mostly in agricultural sector — should be dissolved, 28 merged and 22 others have their roles transferred to other institutions. Some 21 agencies were to be reclassified as professional bodies.
The idea was to rationalise the operations of the state-owned enterprises by removing overlaps, duplication and redundancies to eliminate wastage of public funds, enhance efficiency and bolster productivity.
So far the government has only managed to merge parastatals in agriculture, by establishing the Agriculture and Food Authority (AFA).
The agencies that were collapsed under AFA and are now directorates included Kenya Sugar Board, Coffee Board of Kenya, Tea Board of Kenya, Coconut Development Authority, Cotton Development Authority, Sisal Board of Kenya, Pyrethrum Board of Kenya, and Horticultural Crops Development Authority.
In June this year the Auditor General Edward Ouko revealed that Kenyan taxpayers could lose more than Ksh30 billion ($300 million) in suspicious loans borrowed by State Corporations and reported differently in official government records.
Source: East African