Current sale of State firms raises concerns similar to those of 1970s

Let us walk back in time to January 1970. Kenyans are still excited with their new found freedom from the yoke of colonialism. Finally, folks could freely own land, create wealth and pursue their dreams in a sovereign nation.

However, behind the scenes, the political and bureaucratic elites were singing songs of freedom and victory during the day, but quietly sharing the loot left behind by the colonial masters at night. Seven years into self-rule, the estates left behind by ‘Mzungus’ were fully re-distributed among the new rulers, except for the small matter of State-owned enterprises.

At the global scene, Western and Eastern powers were wrestling over which is the better between capitalism and communism.

African economies emerging from Western colonial masters were caught-up in the crossfire and had to chart a new path for their independent nations.

Heavy with British colonial heritage, the Jomo Kenyatta administration opted for capitalism as opposed to socialism in neighbouring Tanzania. At the time, Uganda had its own internal conflicts, culminating with the Apollo Milton Obote administration overthrow in a military coup by Idi Amin.

As fate would have it, the inherited colonial institutions quickly created wealth disparities between the political class and the civil service.

Exploiting their legislative powers, MPs enhanced their salaries and benefits to the chagrin of gallant civil servants. President Jomo Kenyatta then constituted the Public Service Structure and Remuneration Commission to review and advise on that matter.

Whether this conflict between the political elites and the civil service was a pure coincidence or was engineered by bureaucratic insiders to align with the government divestiture programme of the time, we will never know. What is certain is that the outcome of that Commission, famously referred to as the Ndegwa report of May 1971 has shaped the economic and political trajectory of the country in a fundamental way.

An article by Bankele published in a local daily on January 24, 2017, later updated by the Katiba Institute in June 28, 2020, agonises at how this Ndegwa Report brought riches to public service, while at the same time destroying the civil service ethical fabric forever.  

The genesis of the socio-economic odds that the nation finds itself in was the visibly innocent, but lethal recommendation that allowed civil servants to own property and run business. The Commission argued that if public officers declared conflict of interest in their dealings with government, then in theory, there ought to be no problem.

The net outcome of that simple policy choice was that strategic public entities ended up in the hands of bureaucratic and political elites for a song from the 1970s public divestiture exercise. This created a class of oligarchs that have controlled state power and dictated the democratic discourse in the country for over five decades using the power of their pockets.

First forward to 2022 General Election, the long hand of economic revolutions outsmarted the oligarchs from the 1970s to shift State power outside their aristocratic hierarchy. Indeed, President William Ruto ascended to power by wedging an economic class war between those he branded as State captors and the masses, the hustler nation.

However, among the top promises that he has failed to honour in his three year tenure at State House is the formation of a commission to investigate what he called State Capture on the campaign trail. With hindsight, this would be understandable given that he himself is a benefactor of the very oligarchs he sought to distance himself from to win the presidency.

This brings us to the central question of the day: Could there be any similarities between the ongoing privatisation exercise of State-owned firms and that of 1970s?

In under three years, a number of State affiliated manufacturing companies in the sugar and cement industries have quickly been privatised or leased out for 30 years to private investors in deals that only provide vague disclosures on their details to the publics. Several other entities have been lined-up for offloading through similar transactions.

What has however elicited attention of the publics is the proposed sale of Kenya Pipeline and the near concluded Safaricom deal with Vodacom Group of South Africa. Once the transaction is complete, the government would cede full control of Safaricom to Vodacom, expected to hold 55 per cent of the shares.

Effectively, National Treasury Cabinet Secretary John Mbadi’s argument that they have negotiated for the preservation of the CEO/chairman’s slots for Kenyans reduces to corporate ‘bullshit’. The reason why any investor seeks majority shareholding in any company is to take over the decision control at the boardroom.

Therefore, the government, reduced to a minority shareholder at Safaricom cannot claim it would retain its voice in the firm. That would amount to an absurdity in corporate governance practices. Of much interest to majority of Kenyans is why is the government in a rush to dispose-off this two companies in what appears to be clandestine deals?

For avoidance of doubt, Vodacom has already completed regulatory oversight in South Africa, publishing their intended investments into Safaricom in a note to their minority shareholders dated December 5, 2025. Interested shareholders have 28 days to review the details from the company offices before the transaction is completed with the Kenyan government. Thus, as things stand, Safaricom divestiture is as good as a done deal.

While there is nothing wrong with a government selling off public assets to raise revenues, Safaricom and Kenya Pipeline raises eyebrows since they appear to fall outside the criteria for divestiture set in the Privatisation Act, 2025, ascended by the President on October 15, 2025. The Act seems to prioritise either loss-making State firms or non-strategic public entities.

The two companies fail on this criteria as they would pass as not only strategic but also the top two pricey cash cows for the government. In any case, this disposals of public assets have not slowed down the government’s appetite for debt as anticipated in the Act.

Thus, those asking questions on why now and why the urgency, have a legitimate concern. Notably, the Privatisation Act centralised decision control of the process to the National Treasury CS and removed parliamentary oversight for individual divestiture plans.

Curiously, one of the major decision by President Ruto after he took over was to rescind a government offer to buy back 60 per cent of the holding of UK-based Helios in Telcom Kenya for Sh6.1 billion. In October 2023, his administration then quietly sought a new investor, favouring Infrastructure Corporation of Africa from United Arab Emirates. Google search does not show any information on what was the consideration for this transaction.

Tying the dots together, why would there be so much urgency to dispose of such many State firms in quick succession? Ordinary government revenues keep growing each year, public debt remains on an upward trajectory, Public Private Partnerships have been normalised and every sellable public assets is on offer?

At service points and household pockets, there are no corresponding impacts. Accountability for the money so raised is a scarcely answered question…exactly what is going on here?