Owusu on Africa: Kenya’s privatization policy, necessary but challenging

By Fidel Amakye Owusu

Right after the independence of many African states, the idea of development and the approach to it, took center stage in their respective national discourses.

In some countries, the approach raised objections from some sections of the political space and defined ideological differences that have lingered to this day. Regardless, the fact that some development was needed was indisputable.

With limited private sector and often paternalistic leadership which had overwhelming influence, the state in these newly independent countries often led and carried out the development agenda.

Consequently, many economies adopted import substitution industrialization (ISI). With this, the goal was to produce consumer goods which were otherwise imported and simultaneously create jobs for the growing population. With abundant raw materials, this was considered prudent.

In Ghana, the first prime minister and president, Kwame Nkrumah, focused national resources on ISI. In less than a decade, sugar, glass, tyres, canned fruit, textiles and many other goods were produced in Ghana.

Even for states like Kenya, which did not espouse socialist principles, the state was the major industrialist. In the provision of essential services too, the state could not leave it to an infant private sector.

The state, therefore, became the largest employer and service provider across most of countries on the continent.

What went wrong?

For many countries including Ghana, political instability in the 1960s, 70s and 80s, and the subsequent chronic mismanagement had made these state-onwed industries and service providers inefficient and liabilities. Over-staffing, embezzlement and lack of innovation meant that they mostly survived on government subvention.

“Economic Recovery Programs” led by the Bretton Woods Institutions mostly in the late 1980s advised the privatization and liquidation of most of these factories and firms. These programs came at a cost.

Many people were laid off and others retrenched. The economic hardship that came with ending the cycle of “workers pretending to work and government pretending to pay them” created a chain of problems that are still around. Mitigation against the flip side of privatization did not achieve much results.

Also, in many economies, privatization meant giving state assets to cronies. Sometimes, more viable firms were forced to take control of inefficient ones to their detriment.

Last November, Kenya announced that it is going to privatize several state-owned corporations. While the move is the result of economic difficulties, it is quite obvious that these firms are not bringing in the necessary revenue. Regardless, the opposition is challenging the move in court.

This notwithstanding, the country has many examples across the continent to learn from.

Fidel Amakye Owusu is an International Relations and Security Analyst. He is an Associate at the Conflict Research Consortium for Africa and has previously hosted an International Affairs program with the Ghana Broadcasting Corporation (GBC). He is passionate about Diplomacy and realizing Africa’s global potential and how the continent should be viewed as part of the global collective.