Kenya : PRIVATISATION OF PARASTATALS – THE WORST NEWS OF THE YEAR

In an advertisement with the Daily Nation of Friday of April 12, 2013 the Privatization Commission announced its intention to privatize International Hotels, Kenya Hotel Properties Limited and Mountain Lodge Hotel Limited by selling the shares the government holds in those hotels through Kenya Tourist Development Corporation (KTDC). This includes the lucrative shares in the Hilton Hotel Nairobi, Intercontinental Hotel and Mountain Lodge in the Mount Kenya national park. This is one of the worst news of the year for the SDP that has been in the forefront in the struggle against the implementation of neoliberal economic policies in the country that have only helped to worsen the condition of workers while destroying people’s economy and escalating poverty among the majority of Kenyans.

Those who are in favour of privatization make the parastatals scapegoats of the current economic problems facing the country by arguing that the government cannot cling to its parastatals while citizens go hungry, hospitals lack medicine, free primary education needs financing and teachers and public workers are demanding higher and higher pay, among other things. They also resort to neoliberal driven platitudes that “dynamics of free enterprise dictate that government has no business doing business”. In this regard, they argue that the task of engaging in economic activities should be left to the private sector while the government works to create the necessary infrastructure and enabling environment required. Proponents of privatization also say that as long as this is carried out transparently and according to the Privatization Act of 2005 that created the Privatization Commission, the ongoing privatization of parastatals is not only welcome but belated. Actually, this is tantamount to saying that there is nothing wrong with the robbery of public property as long as laws made to rationalise it are observed and seen to be observed. And who makes the laws ? The same class of people that will buy the privatized state institutions !

When it comes to imposing capitalist reforms upon the Kenyan people, despite its populist rhetoric’s, Cord political alliance does not differ with Jubilee alliance ideologically. They all believe on neoliberal ’trickle - down’ economics of growth national product (Incidentally, we do not oppose economic growth. What we oppose is the lie that growth national product alone signifies development or that an economy based on unfettered and unregulated market forces will lead to development as the wealth appropriated by few individuals will trickle down to other members of society just as mangoes trickle down from the mango tree. As a matter of fact, unregulated market economies have throughout the world only led to growth without distributive justice with widening gap between the rich few and the poor majority. Our position is that the state based on democratic legitimacy should engage in the economy of the country both directly and indirectly and drive it towards sustainable development - economic growth based on social justice and that develops each and all while conserving the environment and natural resources for the present and future generations.)which after decades of implimentation have failed remove poverty and underdevelopment among the majority of citizens. The 11th parliament like previous ones seem either not to have noted the latest work of the Privatization of Commission of privatising the state shares or welcome and embrace privatization that has far reaching consequences to the economy and welfare of the nation. Actually, this is not unexpected for Kenyan parliament and government that is dominated by businessmen and women or people who have been brought up to think that the only road towards development and progress is that of capitalism. When businessmen and women become rulers of a country and dominate its politics, economics and ways of thinking, common persons cry. The history of Kenya continues to show that business people in power always put their interests first before that of the nation. It is not surprising, therefore, members of parliament have remained silent as the property of all Kenyans is robbed by the ruling capitalist class in the name of privatization while they dramatize trivial issues in the august house.

Yes, parastatals are the property of all Kenyan people managed on their behalf by the state. Privatizing the state parastatals means selling the property that belongs to all Kenyans to few rich families both local and foreign. Unfortunately, the news about the privatization that include transferring strategic national economic assets to individuals has always been considered to be trivial by successive regimes that have ruled our country. This, of course, works in the interests of the Kenyan bourgeoisie who wish the property of all Kenyans is transferred to the ruling classes without raising controversy from those who represent the interests of the masses of Kenyans.

The argument that privatization will help the government solve the current social and economic problems including unemployment, hunger, poverty, lack of medicine and other essential services, is a rather simplistic and myopic way of justifying privatization. In the first place, if we go by the history of privatization in Kenya as elsewhere, whenever implemented privatization has escalated unemployment and therefore poverty and hunger while increasing inequality. After privatization the Kenya Railways is almost virtually dead with loss of hundred thousands of jobs. Kenya Telecoms is another case in point where also thousands of jobs have been lost while services have deteriorated under the French company that bought the government corporation. Rather than making profits after privatization as was promised, the capitalist management of Telecom is now soliciting funds from the government - its original ‘inefficient’ and ‘wasteful’ owner - to revamp it !

Secondly, there is no proof hitherto that by privatizing them the enterprises will work more efficiently. The ongoing - often secretive - privatisation of Mombasa Port has not increased its efficiency. Neither has the privatization of public universities led to better standards of education. In any case, even if privatized parastatals were to work more efficiently its mostly for the benefit of the new owners who will appropriate most of whatever profit they make at the expense of society.

Thirdly, privatization of parastatals has not reduced corruption, tribalism and nepotism in their operations in the past and there are no indications that it will do so when carried out today. Actually, privatization is in more cases than none not carried out for the common good. It is usually a conspiracy of the ruling class and their cohorts of violating public property to add to their wealth through primitive accumulation in the era of neoliberalism. The privatisation of lucrative Safaricom through the sell of many government shares - that was opposed by the SDP continues to benefit few rich individuals and organizations in the country at the expense of general public. Take Kenya Airways for example : it used to be state property but now it is privatized although the government still owns substantial shares. It has been expanding and making profits, but so has Ethiopian Airways that is owned by the government of Ethiopia. While Kenya Airways has won praise as a successful privatized parastatal, it has, at the same time, sacked hundreds of workers while many complain of poor working conditions. The rich who control real shares in the Airline become richer and richer every year from the business that carries the national flag.

To justify privatization by saying that it will raise money to deal with immediate problems is very bad economics indeed. Supposing that the sell of the parastatals succeed to raise money to provide medicine, food and salaries to teachers and medicine to public hospitals today. What will happen next year or in future when there are no longer any parastatals to privatize ? What plans does the government have to raise money to pay salaries and solve social problems that are likely to remain with the country for a long time ? Is it not similar to a farmer who decides to sell all of his land in order to solve the immediate problems confronting him ? Is it not more sensible for the government to come out with sustainable long term strategies of reviving the economy and dealing with the present crisis rather than seeking short term populist solutions that cause even more damage in the long run ?

Many times we have been told that state parastatals are privatized because they are uneconomical and a burden to state coffers that are made to fund their losses. But, in fact, the Privatization Commission is note privatizing International Hotels Kenya Limited, Kenya Hotel Properties Limited and Mountain Lodge Limited because the hotels are making losses. The reasons it gives for the privatization is ”to mobilise resources to refurbish and expand the facilities to enable them to play their role in meeting the quality and range of services required under Vision 2030 to improve tourism offerings” and “to enable KDC to effectively play its role as a Development Finance Institution (DFI). As DFI, KDC will be divesting from mature investments to mobilize resources for investment in new developments/projects through equity investments and loans”. Clearly, the Privatization Commission is not selling the state shares in these hotels because they are not profitable but just to dispose of them and transfer them to individuals for the reasons they know - at the expense of the public. After all the popular and prestigious Hilton, Intercontinental and Mountain Lodge hotels cannot be said to be making losses. Whoever is going to inherit the government shares in the hotels will inherit lucrative money minting businesses.

But suppose, for arguments sake, that parastatals in the past were not making profits ; Is that enough reason to sell them ? If private enterprises start making losses what is normally done is that research is conducted to find out why before it is established whether they need to be reformed or abandoned. Kenyan parastatals ought to be reformed rather than to be privatized. They used to perform in the past and therefore there is no reason not to believe that by studying and correcting the mistakes that have made them not to continue performing they can be made to start performing again. There are enough patriotic, qualified and professional Kenyans capable of reforming the state autonomous economic institutions. There is no reason why the same professionals who run the private sector cannot be used to run the state sector as professionally and efficiently provided certain objective conditions are established. These conditions include ensuring that they are operated as independently as possible with no undue interference from politicians in power.

Other parastatals are targeted for privatization even when they are performing. After all if they cannot be able to be reformed, then why are they being privatized rather than being abandoned all together ? Which capitalist worth his mind will invest in or buy a company or enterprise that is incapable of making profit ? Who will buy shares in a company that is likely to collapse ?

The argument put forwards in favour of privatization is that Kenyans will be able to buy shares and become owners of the privatized parastatals is another gimmick meant to hoodwink the majority of people. It is only members of the class of wealthy Kenyans who will buy substantial and durable shares of the said enterprises. Those from the working class who are lucky enough to afford to buy the shares, and at the time of capitalist economic recession, will only be escorting to wealth the real would be shareholders of the enterprises. This is because most people from the high echelons of the working class only buy shares for short term speculative reasons only to sell them sooner than later. But the vast majority of Kenyans who hardly handle any money and merely survive day by day would never afford to buy the shares.

Theoretically, Kenyans are being deceived that in order to have a growing economy the state should keep out of the economy and leave it to the private sector and the dynamics of markets, i.e., only capitalism. In other words, the economic role of the state should purportedly be only to create the necessary infrastructure to facilitate a capitalist economy. But the capitalist system is class system where the means of production are owned by individuals, group of individuals or families. Capitalism, ultimately, only obeys only capitalist laws of maximizing profits for those who own the means of production. The majority of the people, alienated from the means of production, cannot realize true liberation, justice, equality, peace, freedom and social progress under such a system. Under capitalism, the workers, poor peasants and the class of the majority perpetually work and create wealth that is appropriated by the capitalists. Thus the rich continue to become richer while the poor become poorer. This is the experience of Kenya hitherto.

Under neo-liberal, privatization policies are implemented through the discredited structural adjustment programs of the World Bank and International Monetary Fund imposed upon debt and crisis ridden economies of underdeveloped countries. But the present world financial and economic crisis that continues to rock Europe and the USA - actually it is capitalist crisis though it has ripple effects in the whole world - has disapproved these neoliberal economics. Economic liberalisation and so called market forces have been unable to save financial institutions, businesses and industries in the USA, Europe and the whole capitalist world from bankruptcies. Despite all this, the present Kenyan governments still insist upon leading the country along the same economic path that will surely end the country in a ditch. In other words, if the Jubilee government and the 11th parliament appointed young professionals and individuals loyal to neoliberalism as principle secretaries to continue implementing neoliberal economic and social policies then the majority of Kenyans must, inevitably, brace for harder economic times ahead.

Source from http://www.sdpkenya.org