In November last year, President William Ruto announced the government’s plan to privatize 35 state-owned companies following the enactment of a new privatization law. The initiative aims to enhance private sector involvement and streamline public enterprise operations.
Already, the State has outlined 11 state corporations, which include the Kenyatta International Convention Centre (KICC), Kenya Literature Bureau (KLB), Kenya Pipeline Company (KPC), and National Oil Corporation of Kenya (NOCK), to be privatized. Others are Kenya Seed Company Limited (KSC), Mwea Rice Mills Ltd. (MRM), Western Kenya Rice Mills Ltd. (WKRM), New Kenya Cooperative Creameries Limited (NKCC), Numeric Machining Complex Limited (NMC), Vehicle Manufacturers Limited (KVM), and Rivatex East Africa Limited (REAL).
According to the Privatisation Commission, there are 240 commercially oriented public enterprises in Kenya. Of these, 33 are considered ‘strategic enterprises’ where the government intends to retain ownership and active board participation. The remaining 207 have been classified as ‘non-strategic enterprises’ and are part of the government’s privatization program. The first phase will focus on 45 of these non-strategic enterprises, with the rest to follow.
The government intends to improve the regulatory environment by adopting economically rational methods and promoting capital market development. This will diversify ownership and stimulate economic growth.
The current governance arrangement, where ownership rights are diffused among various government institutions, is seen as inconsistent with good corporate governance practices. The new policy will centralize these rights under the National Treasury to avoid conflicting directives and improve efficiency.
Government-owned enterprises (GOEs) often perform non-commercial public policy obligations. The National Treasury will develop a framework to guide how GOEs carry out these obligations transparently and commercially. GOEs will not receive direct or indirect favorable treatment from the government and will adhere to the same rules and regulations as publicly listed companies.
