Author: Eric Orina
Date: January 30, 2007
Type of article: Commentary
Source: The East African Standard http://www.eastandard.net/archives/index.php?mnu=details&id=1143964215&catid=15

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Last week, Telkom Kenya got Sh5.8 billion loan to finance retrenchment and this epitomises the depth to which Kenya’s brand of capitalism has sunk.

It couldn’t have come at a worse time, smack in the middle of the World Social Forum conference in Nairobi. The Government seems hell-bent on selling the country’s major assets to a handful of well-heeled and connected mandarins, completely impervious to the widening gap between the haves and have-nots.

Quick buck capitalism seems to have taken over Government if the sale of Kenya Railways, KenGen, Mumias Sugar Company and the intended sale of Telkom Kenya, Safaricom and even Madaraka estate in Nairobi (whose flats are expected to be condemned in the next few years) is anything to go by.

A sterile political opposition, an ignorant and hapless populace, a fawning, uncritical media and toothless watchdog institutions, trade unions and NGOs have combined forces to grant some profiteers in Government a virtual blank cheque to auction the country to the highest bidder(s).

A few simple questions could suffice. How many jobs have been created through the Government’s over-enthusiastic effort to divest from public corporations? How much of the money raised from the capital market — the Nairobi Stock Exchange — has been used in expanding the productive capacities of any of the companies?

Kimunya erred

Of the millions of shares that have been "offloaded" at the NSE, how many are in the hands of the poor and marginalised 80 per cent of the population? The public has been treated to a well-orchestrated campaign to sell public assets since Finance minister Mr Amos Kimunya set a target of Sh18 billion from the sales to finance this year’s Budget for recurrent expenditure.

In simple terms, Kimunya’s proposal, which went unchecked in an ineffective Parliament, was akin to selling your plot of land to pay for a month’s groceries. Otherwise, if this proposal were to be based on any medium or long-term plan, where would Kimunya get shares to sell every year to generate Sh18 billion to finance recurrent expenses?

At Kenya Railways, a foreigner was handed a prime, strategic public property without paying a cent, and he is now exacerbating the incongruous social order that has existed for decades at the company’s dilapidated staff quarters.

He is whipping a whirlwind into a hurricane by forcing poor and unemployed tenants to pay through the nose for houses that are fit for rats and pigs.

Nowhere in the world has privatisation of railways worked because it is not profitable to run trains though they are indispensable for any country’s growth and development. This is a public good that must be maintained, just as the rough road to the remote village in the countryside.

In the US, the leading purveyor of the man-eat-man brand of capitalism, its railway company, Amtrak, has survived for eons on handouts from the federal government. In the UK, an attempt to privatise the railway backfired and the government had to go back and run it.

Telkom Kenya, the mind-boggling question is why the corporation should borrow such a huge amount of money simply to finance layoffs. Would it not have been more prudent to pay for expansion of its network and investment in new technologies, and retraining workers said to be redundant?

Unproductive venture

True, there may have been over recruitment of staff in the wrong departments. But there are claims that even the thousands of drivers and watchmen, the bane of lopsided media scrutiny, have been overworked and, in some cases, inadequate for the corporation’s establishment countrywide.

At the same time, workers at the corporation have been forced to bear the brunt of the restructuring when shoddy management and the Government’s long and winded procurement procedure are equally to blame for its failure to expand as far or as fast as it should have done.

No prudent financier would have bought the Telkom idea to borrow Sh5 billion for such an unproductive venture. However, the catch was the banks’ access to lucrative Safaricom shares, which the public is being prepared to buy in the next few months.

The question Kenyans should ask is: Why is the Government is so keen to sell shares in Safaricom, a strategic corporation that is doing well financially, instead of licensing more players in order to bring the costs of communication down.

After you and I have bought in the now famous IPO, made a few shillings when they are finally opened for trading at the NSE, who ends up with the shares? Is it not the investment banks and a few tycoons with whale-sized pockets? At that time, tens of thousands of former employees of this or that "privatised" corporation, the breadwinners of millions of Kenyans, will be out on the street, begging.

And please don’t give us that song and dance about their being trained to be entrepreneurs, courtesy of PriceWaterhouseCoopers. The retrenchments of the past two decades have shown clearly that this is the most glaring failure in Africa’s recent economic history, a farce pushed without any rationale by global capitalists led by the International Monetary Fund and World Bank.

When you have spent all your life earning a salary, even Sh1 million will be frittered away when you are suddenly plunged into the deep end of risky entrepreneurship, especially where the environment for small-scale enterprise is extremely hostile.

The writer is the secretary-general of the Kenya Union of Journalists.