In a bid to raise revenue for his nascent administration, the President seeks to privatize parastatals and public enterprises through Initial Public Offerings (IPOs) on the Nairobi Securities Exchange.
While it may seem like a new idea, companies such as National Bank and Kenya Airways were privatized in this same way during the last 12 years of Former President Moi’s era in office, with Former President Kibaki following this with the privatization of six companies through public offerings, including telecom giant Safaricom, KenGen and Kenya Reinsurance.
Kenya Airways’ privatization of a 30% stake in the company through public offering was considered successful at the time, with financial performance five years before privatization being an improvement over financial performance before privatization.
Read: Government Proposes Bill To Abolish Privatization Commission
Currently, the airline is dependent on government support to shore losses, leaving many Kenyans questioning the viability of the private firm. However, the simultaneous financial troubles experienced by neighboring countries’ national carriers Air Tanzania and Uganda Airlines indicates a possible systematic issue cutting across the region.
Little needs to be said about the success of Safaricom, which was privatized through a sale of a 40% stake to Vodafone, as the telecom firm’s success made it the first company to hit a KES 1 trillion market cap in the history of the NSE. KenGen’s listing of a 30% stake in the company on the Nairobi Stock Exchange in 2006 was the largest since Kenya Airways’ listing and is the most relevant as it is on the list of 26 approved privatization programs, with the Kenya Kwanza intent on privatizing the currently government-owned stake in the company. The size and performance of the energy company increased after privatization, despite a decline in efficiency.
There is, therefore, a history of privatization in Kenya that precedes the current President, with history indicating that privatization of State Enterprises is not a scary new idea that President Ruto has introduced, but something that has occurred in the country under every regime except those of Former Presidents Kenyatta and Kenyatta.
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