Yes, parastatals must be allowed to deliver

Thursday May 24 2012

The performance of public corporations has always been a subject of major concern because of their inability to deliver.

Largely, it is because they suffer from poor governance and imprudent resource management.

Historically, State corporations have been perceived as cash cows. Ministers routinely appoint their cronies to their boards to serve their interests rather than perform the required tasks.

Two studies conducted in 1979 and 1982 respectively spotlighted the malaise afflicting the corporations, including political interference, inefficiency and poor financial management.

They proposed changes, including the enactment of the State Corporations Act to cure the malady, but this didn’t help.

Sessional Paper No 4 of 1991 on Development and Employment corroborated these challenges and went on to propose comprehensive reforms, among them privatisation of some corporations, which was done with mixed results.

Even with reforms, most of the corporations continue to perform dismally.

This is why Prime Minister Raila Odinga on Thursday took a swipe at them, noting that some had become a drain on tax money.

He faulted ministers and permanent secretaries for interfering with the corporations and stifling their performance.

Although many parastatals now recruit chief executives competitively, board members are handpicked by ministers.

Poorly performing boards and CEOs continue to thrive while smart ones are sent packing when they refuse to kowtow to the wishes of those who appoint them.

This is the time for regime change and parastatals must shape up.

New laws are required to insulate the corporations from external interference, while performance targets must be enforced so that the parastatals can give value to taxpayers.