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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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