I have previously criticised misaligned IMF conditionalities imposed on countries struggling to balance their budgets.
However, I commend recent IMF requirement that Kenya rationalises its parastatals to cut out public resource wastage, while achieving sustainable efficiencies. A Cabinet resolution last week itemised state agencies that will be merged, privatised or scrapped.
A number of agencies targeted for rationalisation are in agricultural, industrial, commercial and financial areas, some of which had been set up at independence to catalyse sustainable economic growth to fulfil dreams of a new Kenya. And these agencies worked miracles which moved Kenya to a near “economic tiger” status.
However, economic mismanagement of 1980s and subsequent structural economic reforms prescribed for Kenya by IMF in early 1990s essentially weakened whatever economic successes had been achieved by various parastatals.
Essentially, IMF prescriptions permitted import-based consumption to suppress local production, setting parastatals on a rapid decline.
And this is the state of many of agencies today, with institutional and sector expertise virtually gone and mandate relevance lost or misaligned.
The planned parastatal rationalisation can deliver significant savings on the exchequer. However, going forward appointing authorities should strive to appoint boards and management based on competency, sector expertise and integrity- not political considerations.
Parastatals are as effective in fulfilling their mandates as the quality of those appointed to steward them.
As we reduce or merge parastatals, new once are rapidly being created as nearly every new Bill going through parliament has an accompanying board or authority to implement new Acts. There is need to carefully interrogate the need for many new regulatory bodies whose functions can be easily undertaken either by exiting agencies or by parent ministries.
Specifically , merging regulatory and development mandates of multiple crops under Agriculture and Food Authority (AFA) may have led to weakened crop sectors- a situation that needs a new critical review. The ongoing plans to revive Sugar Board is directionally the right step to increase focus on sugar production to make Kenya self-reliant on sugar supply.
Other struggling crops requiring institutional review are coffee, cotton, oil crops, and pyrethrum. However, overlaps with county devolved responsibilities should be expertly managed.
There have been several misguided attempts in the past aimed at privatising Kenya Pipeline Company(KPC) , New KCC, and Kenya Seeds.
These are very critical strategic companies crucial for implementing energy logistics, and food security policies and are therefore best left as public institutions.
The IMF prompted institutional reviews should set stage for formal processes that regularly review and interrogate relevance and effectiveness of all state agencies, guided by rapidly changing national priorities and global opportunities and challenges.
