Why the President must not give up on the proposed parastatal reforms
What you need to know:
- Which is why President Kenyatta must put all his weight behind the Enterprises Bill, the piece of legislation meant to anchor and put into effect the proposals by the task force he appointed, and which he has publicly endorsed.
- This is our best chance at reforming the Sh400 billion sector. After all, what the task force has proposed is in line with what OECD corporate governance proposals prescribe.
- President Kenyatta must put his foot down and do what is in the long-term interest of the country. Let’s tell those IMF chaps to go home.
President Uhuru Kenyatta should not relent on his efforts to reform the mess in the governance of parastatals.
I say so because if he succeeds with what he started when he appointed the task force on parastatal reforms led by former legislator, Abdikadir Mohammed and corporate executive, Isaac Awuondo, he will have left behind an irreversible legacy.
I have been reporting about parastatal reforms since the publication of the recommendations of the Philip Ndegwa-led working committee on state corporations, more than 30 years ago.
Indeed, there was a time when the government created parastatal reform commission known as the Executive Secretariat and Technical Unit.
Yes, the government managed to sell off some parastatals. But when it comes to dealing with improving corporate governance – streamlining board appointments, removing multiple reporting levels for CEOs, rationalising the powers of the so-called parent ministries – we have not moved an inch.
Influential groups and individuals with interests in maintaining the status quo always came up with clever manoeuvres to stall, stop, reverse or put off-track new ideas and reforms. The consequences have been disastrous, to say the least.
ENTERPRISE BILL
Which is why President Kenyatta must put all his weight behind the Enterprises Bill, the piece of legislation meant to anchor and put into effect the proposals by the task force he appointed, and which he has publicly endorsed.
I gather that staffers of the International Monetary Fund’s legal and fiscal affairs department have scathingly criticised this Bill. But who said the IMF is an expert on corporate governance of parastatals? We all know that the IMF’s core mandate is balance of payments support.
We also know that the Fund operates an entity known as Afritac which deals with capacity building issues on a broad range of subjects. We also know that even where you don’t have a programme with the IMF, you are still subject to inspection from them under the so called Article IV consultations.
But the Fund is not known for expertise in governance of economic agents. Indeed, what the task force has put on the table, the government-owned Enterprises Bill, the Sovereign Wealth Fund Bill, and the idea of creating a government investments corporation, are transformational.
This is our best chance at reforming the Sh400 billion sector. After all, what the task force has proposed is in line with what OECD corporate governance proposals prescribe.
Readers of this column who are familiar with contemporary literature on corporate governance will have come across the King II Report on Corporate Governance which was conducted and adopted in South Africa.
Clearly, the proposals the task force and the Bills it came up with are in line with contemporary best practice.
Where you see deviations from either what the OECD says or the South Africa practises, it is due to attempts to customize international best practice due to political realities.
Today, Tamasek Holdings, Singapore government’s investment arm, is regarded as a success story and a critical pillar in the country’s growth.
I read somewhere how Tamasek Holdings has just put up a bid to buy a big stake into one of the largest pharmaceutical conglomerates. Here, we are still arguing about the proposal by the task force to create a similar body.
Singapore developed from its sovereign wealth fund’s pension assets. Here, we have not taken a long-term view on how to utilise NSSF’s assets to develop the country.
For years the NSSF has remained captive to a tiny elite that squeezes rents through inflated contracts and kick-back motivated projects.
Malaysia has its own Khazana Nasionale, a state-owned investment arm. The South Africans have their Public Investments Commission.
It is estimated that there are a total of 17 sovereign wealth funds in Africa. Why are we so slow in creating such a fund here?
President Kenyatta must put his foot down and do what is in the long-term interest of the country. Let’s tell those IMF chaps to go home.
