The government has hinted at scrapping or amending the privatization act in the latest attempt to help financially struggling State-Owned Enterprise (SOEs) raise funds and stay afloat.
President William Ruto, who made the recommodentation during the the launch of the Nairobi Securities Exchange (NSE) Marketplace, wants the amendment to be fast-tracked in the next 100 days to bolster the stock market.
“We have a bad privatization act. Instead of helping with privatization, it has actually stalled the whole privatization agenda, and it is not possible under the current law to carry out the privatization process. If it is not possible for us to amend that law in our first 100 days in office, let us repeal it,” Ruto said during the Marketplace launch.
The NSE Marketplace is an initiative that seeks to revive market activity and boost the growth of the stock market. Ruto promised to push the privatization of between five and 10 parastatals in the next 12 months.
The current Privatization Act allows only the Privatization Commission to exclusively manage and implement any privatization programme. If the Act is overhauled, it will jeopardize the implementation of the privatisation programme, which initially intended to sell about 26 poorly performing State parastatals like sugar millers to strategic investors.
The selling of these troubled enterprises has, however, lagged for years now. Ruto also noted that the privatization act has not helped the country to reach the intended milestone regarding investment and economic growth.
The fresh suggestion by the head of state seems to be a deliberate move to address the underperformance of listed companies on the Nairobi bourse, which has lately suffered massive capital flight to safer havens in other developed economies.
Last June, investment bank EFG Hermes ranked NSE eighth among the 10 top stock markets in Africa.
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