NAIROBI, Kenya, Feb 14 – The Parliamentary Budget Office(PBO) projects that the government could raise up to Sh30 billion annually if it privatizes State-Owned Enterprises through government transfer of all or a part of its share ownership to the private sector.
The PBO in its explored budget options for the 2023/2024 financial year report provides policy options that the government can consider in order to achieve fiscal consolidation in a way that does not harm economic growth but focuses more on increasing productivity and efficiency in the use of resources.
The PBO in the report advised that privatization, if well executed, could become a source of revenue while at the same time reducing costs and risks to the government.
It also noted that the move could invite higher capital investment into the country as the privatized enterprises seek fresh capital to improve profitability and enhance service delivery.
The PBO said that, given the current constrained fiscal environment, privatization may provide deficit financing for the government.
“Privatization also has the potential to create savings by substituting government expenditure for private capital and unlocking the potential of SOEs to increase their efficiency and long-term productivity,” it said.
President William Ruto’s administration has been keen to speed up the privatization of struggling state-owned enterprises to improve their performance and at the same time assist the government to reduce its debt levels.
In January, the National Treasury unveiled the draft Privatisation Bill, 2023 which seeks to provide a framework for the privatization of government-owned firms.
If the regulations are approved, the Bill will see the establishment of a Privatisation Authority which will advise the government on all aspects of privatisation of public entities.
