The IMF Hand In The Sale Of Parastatals In Kenya

Following the recent announcement that the International Monetary Fund (IMF) will expand financing to Kenya, the government announced on 27th November a list of parastatals earmarked for privatization.

The list includes corporations such as Kenya Pipeline Commission (KPC), Kenya Seed Corporation (KSC), and Kenya Cooperative Creameries (KCC) to name a few.

This is in line with efforts suggested by the IMF to help settle outstanding dues and offset balance sheets as the state plans to offload loss-making parastatals that have been a drain on public coffers during this period of short-term liquidity scarcity.

However, the recent announcement has resulted in criticism from various players suggesting that the bid to privatize the state assets was for the benefit of a few key political players instead of an effort of fiscal consolidation for the government.

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The former chairman of (KSC) stated that the privatization of corporations such as the Kenya Seed Company will put the country’s food security at risk as the company may not be able to guarantee the quality and availability of seed to farmers once it is privatized, risking potential food shortages.

Senior opposition leaders also stated that the potential sale of the Kenya Pipeline Commission will lead to a significant increase in fuel prices as private investors will raise transportation costs to increase their overall profit margins. This has led to a debate on whether the privatization of key state assets should be a matter decided through a referendum as the assets are the property of every Kenyan citizen.

In a bid to defend the government’s position, the Ministry of Finance argued that the privatization move will not only generate additional revenues and reduce demand for public resources but will also lead to more efficient running of the said corporations as the private sector is better suited to run businesses compared to the government.

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