Home ECONOMY EDITORIAL: Delay in privatising State firms draining taxpayers

EDITORIAL: Delay in privatising State firms draining taxpayers

by biasharadigest

EDITORIAL: Delay in privatising State firms draining taxpayers

National Treasury building
National Treasury building. FILE PHOTO | NMG 

The continued delay in appointing a fully constituted board for the Privatisation Commission will most likely delay further the sale of State-owned firms which continue to be a drain on the taxpayer.

Most of these firms, especially the struggling sugar miller in western Kenya, have seen their operations ground to a halt, amid perennial demands for bailouts from the Treasury.

Their equipment is also fast depreciating, meaning that when the eventual privatisation does take place, the taxpayer may not get value for money when considering the investment that has already been put into these firms.

The same applies to the prime hotels in Nairobi and other parts of the country that the State is looking to offload.


Some of the hotels have started going into a State of disrepair due to a lack of investment, at an inopportune time when newer establishments by international brands have taken competition in the sector a notch higher.

That the commission has only managed to carry out one successful divestiture since it was set up 12 years ago is another concern, which suggests that the issues within run deep.

While it is understandable that selling off State firms is a complex and time-consuming process, where due care must be taken to ensure everything is above board, the uncertainty over the agency tasked with overseeing the sales does not inspire confidence among taxpayers that they are not going to end up losing.

Sale of these parastatals without an independent board providing oversight can only open the door for underhand deals that would eventually end up costing the taxpayer billions in lost revenue.

This is why the National Treasury needs to ensure that the commission has a functioning board as soon as possible, and MPs should step in now and compel the government to do so.

This will help the management of the firms lined up for sale determine their next course of action, whether it is investing more public funds to revive their fortunes, or to write off some of their operations.

Potential investors also need clarity before taking a decision to buy these firms, which cannot be achieved if the selling agency does not have a functional board that will approve the agreements reached.

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