President William Ruto meets with IMF Managing Director Kristalina Georgieva on the sidelines of COP27 in Sharma El-Sheikh, Egypt on September 21, 2023.
The International Monetary Fund (IMF) has urged President William Ruto’s administration to ensure the ongoing privatisation of State-owned firms is guided by a clear and transparent framework to guarantee public benefit.
The Bretton Woods institution’s comments came a day after President Ruto reiterated plans to sell key stakes in select entities including Kenya Pipeline Company (KPC), even as the public remains divided over how the privatisation process is being handled.
Responding to questions fielded from journalists, director of the IMF Communications Department Julie Kozack said the Bretton Woods institution is pressing for a framework to make the process more transparent.
“What I can say more broadly is that our engagement with the Kenyan authorities on privatisation has been focused on establishing a solid framework to ensure transparency and good governance, with the aim to unlock potential benefits,” said Ms Kozack.
“Our discussions have very much focused on having a framework, and if done well, we see potential benefits that could include, for example, increased efficiency of improved private investment, reducing the fiscal burden, and improving service delivery.”
The Treasury in November last year made public the privatisation programme which showed 11 State-controlled entities with an asset value of more than Sh190 billion are lined up for sale. This is the first programme since the 2009 one which had earmarked about 26 parastatals but derailed.
In May, the government leased out four sugar factories— Nzoia Sugar Company, Chemelil Sugar Company, Sony Sugar Company, and Muhoroni Sugar Company—to private investors amid sustained calls for transparency. The State had initially planned to sell the mills but this was abandoned following stakeholder resistance.
Apart from KPC, other firms that the government wants to offer to private investors include the 33.83 per cent stake in Kenya Hotel Properties Limited, which owns the building that was previously managed by the Intercontinental Hotel Group in Nairobi.
The State also plans to offload an unspecified stake in Safaricom, where it currently commands a 34.9 per cent shareholding.
In addition, the Privatisation Authority invited consultants to guide the sale of the government stake in five top Kenya Development Corporation-controlled hotels, including the Kenya Safari Lodges, Mt Elgon Lodge Limited, Golf Hotel Limited, Sunset Hotel, and Kabarnet Hotel.
The government is also looking for buyers for its 43.77 per cent stake in Kenya Wines Agencies Limited. It also wants to sell the Development Bank of Kenya and the Consolidated Bank of Kenya.
The 2024 Deloitte Africa Private Equity Confidence Survey tipped Kenya to be East Africa’s top investment hotspot for private equity (PE) firms over 12 months driven by the government's push to privatise key firms in diverse sectors such as energy, hospitality, and manufacturing.
“The public institutions on offer are from a range of sectors including energy, manufacturing, financial services, and hospitality, presenting an opportunity for investment from diverse PE sources,” said Kevin Kimotho, East Africa private equity leader at Deloitte in a report published in August last year.
However, in comments aligned with the IMF stance, Deloitte had cautioned that successful privatisation and increased investor confidence in Kenya will largely depend on how the government streamlines the process by among other interventions rationalising the regulatory framework, simplifying the transaction approval process, and increasing public awareness.
