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In the midst of the Coronavirus Pandemic, the Jubilee Government has been making bold moves and attempts at privatising public-owned bodies. On 20th of April 2020, the Principal Secretary for Tourism and Wildlife, Ms Safina Kwekwe Tsungu ordered the closure of the Kenya Utalii College[1] on the grounds that “the college and its hotel could not raise money for operations.” She further stated that the College would be closed down until the Ministry develops a “profitable operational plan.” According to the Ministry, “the government took the decision because the hotel had become a liability as it does not generate revenue.”

In the month of May, the Dock Workers Union exposed a plan by the Kenya Ports Authority (KPA) to privatise berths number 4, 7 and 8 at the Mombasa Port, to the detriment of the Kenyan workers and the Kenyan people.[2]  KPA defended itself by stating that it has not privatised the berths, but it had only “leased out and outsourced the berths and the sheds to private operators for the purposes of efficiency.”

On 2nd July 2020, the local dailies reported that the Ministry of Agriculture had finalised plans to revive the sugar sector by “writing off debts of State-owned mills and out-grower institutions, stopping the importation of brown sugar, and commencing the privatisation of the factories through a long-term lease model of at least 20 years.” Among the state owned mills earmarked for privatisatisation through the planned leasing include Nzoia Sugar, Chemilil, South Nyanza, Miwani and Muhoroni sugar mills.[3]

The Privatisation Onslaught has been ongoing

The privatisation onslaught on these and other public entities has been in the pipeline since the formation of the Privatisation Commission over a decade ago. It is no secret that the successive governments have always wanted to sell off Utalii College and Hotel to the capitalists who control the tourism sector. The Mombasa port has been privatised piece by piece since 2002 in the name of outsourcing handling and non-core services. The veiled beneficiaries are said to be politicians and business people linked to the Kenyatta, Moi, Kibaki, Odinga and Joho families among other individuals who acquired their current wealth by stealing and allocating themselves public owned assets, awarding themselves fat government tenders, funding their private business interest through preferential and concessional debt from state corporations such as Kenya Industrial Estates (KIE), Development Bank of Kenya (DBK) Industrial and Commercial Development Corporation (ICDC) and Industrial Development Bank (IDB). Basically, through thievery and other questionable means.

The privatisation of almost all the sugar companies has been on the table since 2007, and the only stumbling block for the capitalists has been the courageous and continued resistance from the communities where these sugar mills are located.

Since the enactment of the Privatisation Act in 2005, Kenyans have been robbed of several valuable parastatals including the Kenya Electricity Generating Company KENGEN (2006), Kenya Railways Corporation (2006), Telkom Kenya (2007), Mumias Sugar Company (2006), Kenya Reinsurance Corporation (2007) and Safaricom (2008).

Many other publicly owned entities are in the process of being privatised and they include the National Bank of Kenya (whose process is now almost complete through the takeover by Kenya Commercial Bank), Consolidated Bank of Kenya, Development Bank of Kenya, East African Portland Cement Company, Kenya Wine Agencies Limited, Agro-Chemical and Food Company, Numerical Machining Complex, Kenya Meat Commission, several State owned hotels including those that the State owns majority/controlling shares including Hilton Hotel, Intercontinental Hotel, Mountain Lodge Hotel, Ark Hotel Nyeri, Sunset Hotel, Kabarnet Hotel, Mount Elgon Lodge, Kenya Safari Lodges and Hotels, just to mention a few.

IPOs, PPPs and Direct Sale

The excuses provided when the capital owning class wants to privatise an entity varies with the status of the entity. If it wants to privatise a profit-making and efficiently-run parastatal like Safaricom and KENGEN, it will claim that it wants all Kenyans to enjoy the profits that these companies make, and they usually use the “Initial Public Offer” route.

Through initial public offers, it is argued that every Kenyan (including those who cannot afford a decent meal) gets an equal chance to purchase some share of the parastatal, where they will directly enjoy the dividends arising therefrom. What the drivers of capitalism in the Kenyan government do not tell Kenyans is that the Parastatal is actually being stolen from all Kenyans, and being appropriated in the hands of a few individuals who can afford billions worth of shares in these companies. The equal chance of ownership in real sense is the equal chance for the rich class, and not equality for all.

When they want to privatise a profit making entity, but which is at the same time marred by corruption and/or inefficiency, or where they can foresee strong opposition from the masses, they use the Public Private Partnership (PPP) route. This includes leases, out-sourcing, concessions, and lease/build & own/run-operate models. Examples here include leasing of Cargo handling services at the Kenya Ports Authority and at the Jomo Kenyatta International Airport, the first privatisation of Kenya Railways, outsourcing of security and cleaning services in majority of the public institutions and even outsourcing human resource functions in some of the state bodies.

Through PPPs, the masses are hoodwinked and told that the private entity is there not to steal from them, but to root out corruption and increase efficiency in the institution. In real sense, the private entity, whose sole aim is profits, ends up sacking workers, overworking and mistreating the retained workers, reducing the benefits that the workers get, and employing all short-cuts that will help them achieve their ultimate goal; Profit! In such arrangements, the government (public) gets to foot any losses or heavy investments that might come up along the way. Basically, the first P (Public) suffers any losses and investment costs, while the second P (private), runs away with all profits at zero risks!

Thirdly, if a Parastatal is run down through mismanagement, cronyism, sabotage or any other reason, the route they choose is that of sale, either by auction, offers, or through strategic sale, and sometimes through concessions/long term leases. Some good examples here include the privatisation of Kenya Railways and Telkom Kenya. In most cases, as is the case in the intended privatisation of the Sugar Mills and the Hotels, the Government (basically Kenyans) is forced to foot all the losses, and sometimes billions of taxpayers’ money are used to overhaul the corporation before sale, or are extended to the would be buyer as some form of incentive. Whereas the logical thing to do to a mismanaged entity is to manage it better, the capitalists prefer to use the mismanagement as an excuse to privatise the national entity in question.

 

Mismanagement and sabotage of state corporations is sometimes done deliberately, with the long term aim of privatising those corporations. For example, whereas Utalii Hotel and other state-owned hotels are struggling to stay financially afloat, the Government continues to spend billions of shillings in meetings and retreat expenditure in big private-owned hotels year in year out. It would be prudent if the capacity of the state owned/controlled hotels was first exhausted before such services are sourced from private hotels!

The Kenya Pipeline Corporation (KPC) is one of the largest companies in the region. KPC has an asset base of sh136 billion, and it made profits of 12.4 billion and 11.5 billion in 2018 and 2017 respectively. However, rather than bank with state owned banks like Consolidated Bank and Development Bank of Kenya, KPC has local and foreign currency accounts at Barclays, Commercial Bank of Kenya, Standard Chartered, Citi NA, Equity, KCB and CFC Stanbic banks. The University of Nairobi which has an asset base of over 4 billion has Barclays Bank as its principal banker. The story is the same for most parastatals. In other words, the Government transacts billions of shillings with private institutions thereby starving state owned corporations of the much needed money, and when these state owned institutions get into financial troubles, the Government claims mismanagement among other excuses, and then it sells these corporations to private individuals, starts doing business with the now private company, and the turnaround is attributed to privatisation and not Government support!

 

Parastatals are not for-profit making organisations

In the final analysis, parastatals are not profit making bodies. The role of parastatals is to provide accessible, quality and affordable services to all Kenyans, especially the majority poor. Parastatals act as protectors of the masses from exploitation by the private entities. They are tools and pillars of nation building. Further, parastatals and other public entities act as a balance in the ‘market’, and they provide employment, and build local capacity through education, import substitution etc. The privatisation of state owned assets is a direct threat to the prosperity and inclusive development in this country.

The Kenya Utalii College for example was a brainchild of the (in)famous sessional paper number 10 of 1965 (African Socialism and its application to planning in Kenya) where it was decided that a “training school for hotel, restaurant and lodge managers and workers” would be established, so as to promote tourism, conservation thereby creating employment and increasing hard currency among other benefits. The College has since its inception produced highly qualified, competent and confident workers in the hospitality and related fields. It has not only provided affordable training opportunities for Kenyans, but many students from across Africa compete to get admission at Utalii College. The quest for profit was never a reason why the College and Hotel were created.

It is unimaginable if the same “profit” argument would be extended to all other public institutions. If the Ministry of Health decided to open or close the Kenyatta National Hospital (KNH) on the grounds of profitability, the Hospital would have been closed long time ago. On the other hand, Kenyans should be very worried when they hear that a public corporation, whose main goal is to offer services to all, is instead making profits. The question would be, at whose cost were the profits made? In the example of KNH, it would mean that patients are charged more, so that the hospital makes more profits. It would also mean that workers are paid less and overworked so that profit can be made. This would then translate to the hospital becoming inaccessible to the poor, and hostile to its workers.

This obsession with profits has even crept into the public universities, which are now required to stay profitable otherwise they risk collapsing. Higher education has been transformed into a business, where colleges compete to offer “marketable” courses instead of courses that are needed for the benefit of the people and the Country. The consequences can be seen in the downgrading of practical/technical courses, the reduction in the quality of teaching, reduced funding for research, and the production of graduates who might not be very useful to the society.

Kenyans must reject Privatisation in all its forms. Privatisation is the appropriation of public wealth into the hands of a few. Privatisation means unemployment and poor working conditions. Privatisation leads to poverty. Privatisation, as socialists have insisted over the years, is theft. The Communist Party of Kenya therefore calls on all workers, all unions and all patriotic Kenyans to oppose the ongoing and planned privatisations, and to further demand for the re-nationalisation of the previously privatised corporations at the cost of all those who masterminded and benefited from those privatisations.

Benedict Wachira,

Secretary General, Communist Party of Kenya

 

 

 

 



[1] 'Utalii College and Hotel, Campuses Shut' (Daily Nation, 2020) <https://www.nation.co.ke/news/Utalii-College-and-hotel--campuses-shut/1056-5531932-f6huo8z/index.html> accessed 25 July 2020.

 

'End of an Era as Prestigious Utalii Hotel Closes Its Doors - People Daily' (People Daily, 2020) <https://www.pd.co.ke/business/trade-and-industry/end-of-an-era-as-prestigious-utalii-hotel-closes-its-doors-34044/> accessed 25 July 2020.

 

[2] 'KPA, Union in Exchange over Port Privatization Claims' (The Star, 2020) <https://www.the-star.co.ke/business/kenya/2020-05-14-kpa-union-in-exchange-over-port-privatization-claims/> accessed 25 July 2020.

 

Philip Beja, 'Workers Warn of Plans to Make Port Private' (The Standard, 2020) <https://www.standardmedia.co.ke/business/article/2001370732/workers-warn-of-plans-to-make-port-private> accessed 25 July 2020.

 

[3] 'Rai among Bidders for Five State Sugar Firms' (Business Daily, 2020) <https://www.businessdailyafrica.com/economy/Rai-among-bidders-for-five-State-sugar-firms/3946234-5604008-gqy0koz/index.html> accessed 25 July 2020.

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