President William Ruto addresses Parastatal Chairpersons and Chief Executive Officers on March 25, 2024. PHOTO | PCS
President William Ruto recently hosted a meeting at State House Nairobi where he assembled all chairmen and CEOs of parastatals to articulate his vision and map out the way forward for this critical sector.
The President needed to say something bold and innovative but in my view, he did not because most of what he said expressed mainstream ideas.
The economic content was not only consistent with contemporary practice but accorded short shrift to the deep reforms and ambitions we have over the years been discussing.
Indeed, the agenda for reform in this space was comprehensively dealt with by the presidential task force on parastatals reforms of 2013 led by Abdi Kadir Mohammed and Isaac Awuondo.
Some of the key recommendations of the team included corporatisation of all commercial entities under the Company’s Act, ownership and portfolio management by an investment holding company, and finally taking these companies to the market which has been done with Dubai Ports, Singapore Ports and Canada Rail.
Our ambition was to see portfolio management taken to a level where the government regularly gets out of mature investments and uses the money for development in other areas.
And the key piece of legislation that was supposed to put the recommendations of the presidential task force was the Government Enterprises Bill (GOE Bill) of 2013.
Our ambition was to establish the proposed Government Investment Corporation in the image of Tamasek holding company of Singapore or Khazana of Malaysia. We had ambitions to establish a sovereign wealth fund. We wanted to establish Biashara Bank to take over and play the role of a single SME Agency to amalgamate the too many and duplicative affirmative action funds run by the government.
We had the ambition to implement the Mwongozo code and to establish one single financial sector regulator to oversee the operations of entities such as the RBA, CMA and SASSRA
Why are parastatals important? This economy cannot achieve a sustainable take–off if our only electricity utility, Kenya Power, remains broke and continues to teeter towards insolvency.
Economic conditions stand no chance of improving if manufacturers are unable to get imported inputs here on time because of an inefficient port and if Nairobi were to lose its position as the transport hub of the region because of a poorly run international airport.
To be on top of things in the running of economy, we must overhaul corporate governance of the parastatals, especially large utilities providing critical infrastructure such as the Kenya Ports Authority, Kenya Railways, Kenya Power, Ken Gen, Kenya Pipeline, Kenya Electricity Transmission Company and the Geothermal Development Corporation and Kenya National Highways Authority.
And, we must introduce deep reforms in the governance of key regulatory authorities such as the Communications Authority of Kenya, the Energy and Petroleum Regulatory Authority, the Competition Authority of Kenya, the Capital Markets Authority, the Insurance Regulatory Authority and the Sacco Societies Regulatory Authority.
Interference and bureaucratic meddling in the running of regulatory authorities by Cabinet Secretaries and Principal Secretaries has become the order of the day, with these autonomous regulatory entities governed as if they were mere appendages of ministries.
This messy corporate governance regime cause the problem of multiple accountability. The reason we are unable to enforce proper accountability on CEOs of parastatals is because they report to and are held accountable by multiple people.
Read: Kenya out of debt distress on painful taxes
I think we should debate whether or not to repeal the State Corporations Act so that we scrap entities like SCAC and the inspectorate of statutory boards. They bring confusion in the corporate governance of parastatals.
The writer is a former managing editor of The EastAfrican.
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