President William Ruto announced on Thursday, November 23, 2023, the government’s commitment to privatize 35 state-owned companies hampered by bureaucratic processes.
This initiative is part of a broader strategy to boost productivity following recent legislative changes. Ruto’s administration had passed an amended privatization bill last month, streamlining the process of selling state enterprises to private entities.
“We have identified the first 35 companies that we are going to offer to the private sector,” Ruto told a gathering of African stock market officials in Nairobi.
The revised law aims to enhance private sector involvement in the economy, a goal highlighted during the signing ceremony by the presidency. Speaking to a gathering of African stock market officials in Nairobi, Ruto disclosed the identification of the initial 35 companies earmarked for privatization. He stressed the importance of freeing state-owned firms from government bureaucracy, noting that approximately 100 such entities were under consideration for potential privatization.
Ruto argued that many of these state-owned enterprises could operate more efficiently under private-sector management. The move toward privatization is viewed as a strategic response to challenges facing Kenya’s economy, including financial constraints, soaring inflation, and a depreciating currency contributing to increased debt repayment burdens.
The International Monetary Fund (IMF) recently greenlit a USD 938.0 million loan for Kenya, with an additional USD 2.0 billion or KES 305.9 million Eurobond repayment looming next year. The IMF has advised Ruto’s government to implement reforms in public sector entities, with a particular focus on major players like the national electricity supplier, Kenya Power, and the national carrier, Kenya Airways, both of which incurred substantial losses in 2022.
In tandem with international support, the World Bank has expressed its intention to provide Kenya with USD 12.0 billion or KES 1.8 trillion in assistance over the next three years starting July 2024. However, the country grapples with a significant debt burden, surpassing KES 10.6 trillion as of November 10, 2023, equivalent to about two-thirds of the gross domestic product. As Kenya addresses economic challenges, the privatization initiative aims to unlock the potential of state-owned enterprises, fostering a more dynamic and competitive economic environment.
