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Kenya: Govt Should Follow Privatisation Law
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The East African (Nairobi)
EDITORIAL
6 July 2008
Posted to the web 7 July 2008
Nairobi
THE VOTE OF NO CONFIDENCE BY KENYA'S PARliament in Finance Minister Amos Kimunya last week brought to the fore fundamental issues on public procurement and privatisation.
The censure was premised on the sale, for a consideration of $45 million, of Grand Regency Hotel by the Central Bank of Kenya through private treaty, as opposed to auction or tender. Parliament believes that the Kenyan taxpayer would have gained a better price were the latter two methods followed.
While the issue of price is subjective what is not in doubt even to the most ardent government supporter is that the manner in which the sale of the hotel was effected did not endear public confidence. That the sale of the hotel has generated so much heat is, therefore, not surprising.
Since 1992, when the privatisation programme started, Kenya itself has had its fair share of bungled sales of public property, including the now reversed disposal of the Kenya Co-operative Creameries and that of Kenya Seed Company to then politically well-connected individuals.
The enduring lesson from such flawed processes has been that the sale of public property everywhere must be carried out openly. Credible valuations must be done, expressions of interest received through local and international bidding, and avenues of appeal be retained in the event of disputes among bidders.
In Kenya, virtually all these principles are provided for in the Privatisation Act which received presidential assent in October 2005, and which came into force in January this year. The slow pace in putting in place the structures that are needed to implement the Act, however, means that its full benefits have not been realised.
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While a privatisation commission has been appointed, for example, it is inexplicable that this still does not have a functioning secretariat with a defined executive. Only by operationalising the Act and empowering the commission can the government gain the public confidence to drive the divestiture programme forward.
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