Kenya’s privatization policy: necessary but challenging
By Fidel Amakye Owusu
1. Right after the independence of many African states, the idea of development and the approach to it took center stage in the respective national discourses.
2. In some countries, the approach had raised objections from some sections of the political space and defined ideological differences that have lingered to this day. Regardless, the fact that some development was needed was indisputable.
3. With limited private sector and often paternalistic leadership who had overwhelming influence, the states often led and carried out the development agenda.
4. Consequently, many economies adopted Import Substitution Industrialization (ISI). With this, the goal was to produce consumer goods which were otherwise imported and simultaneously create jobs for the growing population. With abundant raw materials, this was considered prudent.
4. In Ghana, the first prime minister and president, Kwame Nkrumah, focused national resources on lSI. In less than a decade, sugar, glass, tyre, meat, canned fruit, textiles and many other goods were produced in Ghana.
5. Even for states like Kenya, which did not profess many socialist principles, the state was the major industrialist. In the provision of essential services too, the state could not leave it to an infant private sector. The states, therefore, became the largest employers and service providers across the continent.
6. And so what?
7. For many countries including Ghana, instability in the 1960s, 70s and 80s, political instability and chronic mismanagement had made these industries and service providers inefficient and liabilities over time. Over-staffing, embezzlement and lack of innovation meant that they mostly survived on government subvention.
8. Economic Recovery Programs led by the Bretton Woods Institutions mostly in the 80s advised the privatisation and liquidation of most of these factories and firms—it came at a cost.
9. Many people way laid off and others retrenched. The economic hardship ship that came with ending the cycle of “workers pretending to work and government pretending to pay them” created a chain of problems that are still around. Mitigation against the flip side of privatisation did not achieve much results.
10. Also, in many economies privatisation meant giving state assets to cronies. Sometimes, more viable firms were forced to take control of inefficient ones to their detriment..
11. Last November, Kenya announced that it is going to privatise several state-owned corporations. While the move is the result of economic difficulties, it is quite obvious that these firms are not bringing in the necessary revenue. Regardless, the opposition is challenging the move in court.
12. This notwithstanding, the country has many examples across the continent to learn from.
By Fidel Amakye Owusu – International Relations and Security Analyst and Writer
Article Reproduced with Permission from Fidel Amakye Owusu
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