Cabinet Approves Privatization Bill 2023

The Privatization Bill 2023, which gives the Treasury the power to sell off publicly held companies without parliamentary approval, was approved by the Cabinet yesterday.

It includes frameworks for law and policy that will oversee all privatizations in the country.

According to the Cabinet, selling non-strategic, underperforming public entities will enhance Kenyans’ access to services.

“To support the state’s divestiture from non-strategic sectors of our national life, Cabinet approved the Privatization Bill,” the report from the Cabinet stated.

“The revised policy shift seeks to revitalize Kenya’s Capital Markets through the review of the framework for State divesture as part of a wider reform process targeting Public Enterprises.”

Additionally, privatization is expected to lower the demand for public resources and generate more revenue to help support government development initiatives.

In order to give the government a clearer framework within which to operate the privatization program, the Parliamentary Budget Office (PBO) urged for the repeal of the Privatization Act 2005 last month.

According to the budget office, the annual earnings from the privatization of state-owned businesses might reach Sh30 billion.

PBO strongly suggested the privatization of parastatals in a study on budget options for FY 2023–2024 in order to strengthen the financial standing of State Owned Enterprises (SOEs), projecting that the action will generate revenues of up to Sh30 billion yearly.

The budget office stated that by privatizing, they will be able to help the aspirational administration carry out its development ambitions and also give money to help pay down the country’s mounting debt.

“For long-term impact, privatization proceeds should be earmarked to capital projects that have the potential to generate future revenues or be used to retire expensive public debt,” read part of the statement.

PBO further proposed that a privatization policy be established to foster better growth strategies for the SOEs in order to yield long-term benefits.