Privatization has been a contentious issue in Kenya’s economic discourse. While it is often championed as a means to improve efficiency, reduce public spending, and attract investment, its implementation has sparked debate on whether ideology outweighs practical outcomes.
Kenya’s privatization journey began in the 1990s as part of structural adjustment programs (SAPs) promoted by the World Bank and IMF. Since then, numerous State-Owned Enterprises (SOEs) have been privatized. For instance, Kenya Airways was partly privatized in 1996. Initially hailed as a success, its financial struggles in recent years highlight the risks of privatization when governance and market conditions are not carefully managed. By 2023, the airline recorded a net loss of KES 22.7 billion, raising concerns about its sustainability despite private ownership.
Advocates for privatization argue that private entities are more efficient than their state-run counterparts. For example, Safaricom, which was partly privatized in 2008, has grown into Kenya’s most profitable company, contributing 5.2% of Kenya’s Gross Domestic Product (GDP) by 2020. This success demonstrates that, when implemented correctly, privatization can spur growth and innovation.
However, privatization has not always delivered promised benefits, particularly in essential services. The privatization of Kenya Power in the 1990s was meant to improve efficiency and lower costs. Instead, frequent power outages persist, and electricity prices remain high, averaging KES19.0 per kWh in 2024. Many argue that profit motives have overshadowed service delivery.
Moreover, critics highlight that privatization can deepen inequality. Public assets often end up in the hands of a few well-connected individuals, exacerbating wealth disparities. The sale of key SOEs without transparent processes further fuels these concerns, as seen with the challenges surrounding Mumias Sugar Company’s restructuring.
While ideology often shapes privatization debates, Kenya’s experience shows the need for pragmatism. Sectors such as water, healthcare, and education require a delicate balance. For instance, water utilities in Nairobi remain a mix of public and private partnerships, yet a sizable population of Nairobi still lacks reliable access.
Kenya’s privatization track record illustrates that results are mixed. The focus should shift from ideological debates to practical solutions. Privatization should only proceed where governance, regulation, and social equity are ensured. After all, the ultimate goal is to serve the public interest effectively and inclusively.
