President Ruto backs privatization of State Corporations

President William Ruto has backed the privatization of State Corporations in a move to raise more funding for the government.

Privatization is expected to see the sale of government firms to the public through initial public offers (IPOs) in addition to further divestitures to State-run firms that are already listed on the Nairobi Securities Exchange (NSE).

“I have created the Ministry of Trade, Investment and Industry so we can look much closer to our financial markets working with our State Owned Enterprises (SOEs) and assess the ones we can bring for the public to be owners so we can share in the profits and release some resources for us to deliver on some of our infrastructure requirements instead of borrowing,” President Ruto said.

The privatization of State Corporations would serve in ending the Nairobi Securities Exchange (NSE) listings drought whose last initial public offer (IPO) came in 2015.

Privatization would mark a win-win outcome as the government also unlocks key financing with the Public Budget Office (PBO) for instance having projected billions for the exchequer from divestitures in company holdings.

Previously, the Capital Markets Authority (CMA) has proposed the sale of State Corporations including divestitures to unlock the pool of funding.

“If the government can offload another 10 per cent in its holdings in Safaricom, that’s plenty of financing to address issues such as budget deficits and debt repayments,” CMA Director of Regulatory Policy and Strategy Luke Ombara said in 2020.

The CMA has already placed the Kenya Pipeline Corporation (KPC) and the Kenya Ports Authority (KPA) on its privatization wish list.

The government has nevertheless tasked the Privatization Commission with the task of transacting sales in SOEs.

Over recent years, however, the Commission has only brought ailing firms to market as it seeks to reduce risk exposures to the exchequer.

On Tuesday for instance, the Privatization Commission issued tenders for consultants as the government seeks to dispose of the cash-strapped Consolidated Bank of Kenya and the Development Bank of Kenya (DBK).