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We lost a decade in reforming Kenya’s state corporations

May 13, 2012 Management, Sunday Nation

Back in 2003, we thought we had put the era of truly horrible state corporations behind us. The new government of the day, swept into power in a massive rejection of the failures and excesses of the 1990s, promised to reform the public sector and revitalize all of Kenya’s dead or dying parastatals.

A good start was made: new management teams were installed; performance contracts were introduced; professional managers from the private sector were recruited to inject expertise; “ICT” became the buzzword in the corridors of state corporations.

So what happened? When we look around us with an objective eye, what do we see? Wherever there is a state corporation, there is often disarray and disorder and service failure. Nine years after the vital project to construct a new world-class airport in Nairobi commenced, the passenger has yet to feel any benefit. Our great port in Mombasa is still bedevilled by unending corruption, service delays and ethnic strife in its leadership.

The energy sector remains besmirched by unending accusations of procurement scams. The Kenyan power consumer is now subjected to regular and unpredictable blackouts, and still pays a world-topping price for electricity. Our social security fund still grapples with ghosts from its controversial past. Afters years of reversals, we are yet to have a viable and useful rail network.

I could go on, but what’s the point? The recent controversies surrounding the National Health Insurance Fund, and the subsequent farce played out in front of television cameras, should prove to us once and for all that we have a problem here. Wrangles, scams, political divisions and power plays are the order of the day.

If we keep looking away and pretending nothing is wrong, we will retard our national progress for another decade. This madness has real consequences, after all: it costs us the education of our children, the health of our citizenry, the competitiveness of our industries.

I write this with a heavy heart. I meet many excellent managers and board members from state corporations, with good intentions and a professional approach to their work, and have no wish to discourage them. But they are mostly hamstrung by the tentacles of the system in which they work; one in which political patronage, rampant corruption and narrow private interests prevent any real progress.

What can we learn from the handful of state corporations that have actually excelled and made a difference? First, that leadership matters. You cannot leave the board and senior executive positions of these vital institutions to the whims of politicians – you have to recruit purely on merit, qualifications and integrity. Second, that you have to instil a fresh work ethic and culture in employees used to slovenly standards of service, and that invariably takes time. Third, that you need a layer of protection from the politicians who always circle around state corporations like vultures, seeking campaign funding.

The new constitution, when properly implemented, will address many of these issues. New policies governing state corporations are also due to be published soon. But the path to reform will be a rocky one, resisted by all those who have benefited from badly run, poorly controlled public institutions.

Meanwhile, the people of Kenya should stop accepting bad performance from state bodies as somehow natural or expected. It is not. We have lost a decade in which decisive action and systematic reform could have achieved wonders. Instead we are left wondering what might have been.

A good public corporation should have no lesser standards then a private one. If anything it should have the advantage of meaning, of working for the public good rather than private enrichment. But to attain this, state corporations should be run by the best and brightest and ring-fenced from partisan politics and narrow interests. For a state corporation to have any meaning, it must work solely in the interest of the people.

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  • Nicholas Kamonye

    Sunny, i agree with most of what you’ve said though i am rather cautious when it comes to ‘ring fencing’ the state corporations from partisan politics…

    I have come to appreciate that government is primarily concerened about the social welfare of the people rather than their wealth or its own. I have come across decisons made in such corporations that do not make much business sense but on closer scrutiny they were important in delivering social justice.

    Corruption is bad but it does have its positive aspects. Take the example of the water ministry taking much of the resources to Ukambani. Most of the water deals done here were illegal and devoid of any sense of equitable distribution of resources. However these decisions benefited the people of Ukambani who had for a long time suffered from lack of water. Had we remained along the straight and narrow, the water problems in Ukambani would still be here.

    I propose that the kind of leadership we need in our state corporations is a special one. One that may be able to maintain professionalism without losing sight of the social aspect of government. Whether these special ones are out there is a totally different thing.

    • Nicholas:

      When we are reduced to praising corruption because it’s the only way to do something, we are in serious trouble. But you’re right, that’s where we have arrived…

  • This article captures my pains & disappointments as an ambitious Kenyan youth. Am so annoyed with NHIF, NHIF and the Youth Fund saga; however tweeting about it doesn’t help it..Does nothing so we got to do something about this!
    First and foremost there’s a lot of talk about why Kenya can’t be where Singapore & Malaysia are; Off course we got all we need to be there but one thing that’s hindering this [Corruption]. KACC will never clear this ghost in Kenya however a strong judiciary will help fix the mess. (It’s happening right now) Kudos CJ mutunga. The era of commissions of inquiries in Africa is long gone.
    Secondly we have the elections coming up next year; so with an ID card & a voters card one can reduce the number of non- performers in parliament. When the govt changes some parastatal chiefs will also leave! Half of the problem is now solved; then we need to have brilliant business leaders who are willing to take up & fight for these positions. I like what Evans Kidero has done and I wish him well as he tries to bring sanity in how issues in Nairobi are done. That’s a brave move! With brilliant business leaders heading these parastatals then the govt & political parties can’t interfere with these bodies for selfish needs & thus corruption. How do they do that? We should be fearless & fierce because they are on a mission to do something for Kenya hence their decisions will not be swayed by politicians because if you are axed for trying to change a few things then you can move back to that corporate world easily!
    Finally we need a media that reports on facts. What’s happening right now Sunny is some of these parastatals can manage to do crap & rot while the media is watching. These firms bully the media houses, the parastatal chiefs also dish out handouts to poorly paid journalists who rush to cover any small good thing they’ve done.Some editors are also on their payroll to ensure nothing ‘so negative’ is published.
    I don’t want to mention names here but there’s a big noisemaker who is notorious for this…but the photo journalists & writers rush to cover his briefings. Lets have a transparent media that doesn’t give too much PR at the expense of honest reporting. I have done PR & Media and I have my facts right when I say the above. Lets do something for Kenya. Lets #DoitFOR254
    Here are few more thoughts on how marketers and entrepreneurs can solve the problems in the world in an enabling environment with little support from the govt.

  • Warue Kariuki

    How true! We had great expectations but we didn’t seem to realise that we had recycled leaders who had taken a new boat to keep afloat. I agree we need to have higher goals and demand the best from our leaders, who we can hold accountable. However, we need to develop skills of recognising good leaders while also learning what we expect from a government. I think that is where we have missed the point; government is not a donor or a philanthropic entity. It has a responsibility to the citizens it represents and acts on behalf of and should start by respecting those citizens, not looking down on them.

  • Great piece Sunny. I would just like to [if I could] ram home the final point you made. I am yet [In my 13-year adult life] to meet one individual who is so fired up at the chance to work in a state corporation. For meaningful work, to serve the people and the country.
    Actually I wouldn’t even need all the fingers of my hands to count the number of my peers who work in state corporations. And if I do, half of them are not too proud!
    It is my hope that the next elections will do us the much needed filtering of the dross that is the current leadership and that the next batch will help make up for lost time. I too choose to remain positive and also agree that the new constitution, once firmly clicked into position, will help to eliminate these ghosts.

  • Peter

    The big difference is that the all powerfull boards for the state corporation are populated by people who have no “real” stake in the corporations they lead. There is no correlation between the enormity of the decisions the boards have to make e.g. KES 8B project to build an airport v/s KES 25K seating allowance every couple of months. You cannot compare that to a private entity where the members of the board will derive direct value from the success of the projects. It is therefore futile to expect the same level of performance.

    To make a real difference, we must find a mechanism for getting real quality people onto the boards and incentivising them to perform. Appealing to their civic duty has proved to be futile, it just cannot compete with self-interest.