In response to pressing economic difficulties and liquidity challenges exacerbated by the COVID-19 pandemic, the war in Ukraine, and a severe drought in the Horn of Africa, Kenyan President William Ruto has revealed plans to privatize 35 state-owned companies and is considering opening up the capital of 100 others.
Kenya, often considered the economic powerhouse of East Africa, has seen its economy severely impacted by a series of global and regional crises. The country’s public debt reached over 10,100 billion shillings (64.4 billion euros) at the end of June, accounting for approximately two-thirds of the gross domestic product.
President Ruto addressed investors, stating, “We have identified the first 35 companies that we are going to offer to the private sector, and we have nearly 100 others.”
The move comes after the International Monetary Fund (IMF) urged Kenyan authorities to reform state-owned enterprises, citing concerns about entities such as Kenya Power and Kenya Airways, both facing significant financial challenges.
In a recent legislative move, President Ruto signed a law easing the privatization process for public companies. The President emphasized the potential of the private sector to unlock the full potential of lucrative state-owned enterprises currently hindered by government bureaucracy.
The IMF recently approved a $938 million loan for Kenya, and the World Bank announced plans to provide $12 billion in support over the next three years.
The Kenyan government, under President Ruto’s leadership, is working on a budget, including unpopular measures such as new taxes, aiming to generate 289 billion shillings (2 billion euros) to supplement the planned 3,600 billion shillings (24 billion euros) budget for 2023-24.
President Ruto acknowledged the challenges faced by the population due to the proposed budget but asserted that the measures were crucial for addressing the economic crisis and reducing the country’s debt burden.
The privatization initiative is expected to bring in fresh capital, enhance efficiency in state-owned enterprises, and stimulate economic growth as Kenya navigates through challenging economic times.