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February 21, 2019

Parastatal clean up will be a bitter pill to swallow

Some recent good news, possibly a double dose of it. For one, the presidential task force on parastatal reforms recently presented their suggestions on how to streamline the parastatal sector. And not a day too soon. That the parastatal sector was way too expansive is hardly news (I do remember reading a public expenditure review, a surprisingly interesting one, by Prof Anyang’ Nyong’o back when he was minister of planning and development under the first Kibaki administration in which he drew attention to the fact that there was a profusion of ministries and parastatals that needed to be streamlined to avoid overlaps and waste of public money. But that was, of course, before he accepted to run one of two health ministries, funnily enough).

The other sensible move is announcement to reduce and streamline public sector employment to lower the public sector wage bill and free up funds for more productive investments. This may affect up to 100,000 people.

Parastatal reform also does not make much sense unless the overall staff number is lowered. If you merely bunch together several former parastatals and government agencies in new organisations without reducing overall staff numbers, the savings – and other benefits – will be very limited (of course reducing numbers is only one part of making organisations work better). For both government organisations and parastatals, you also want to make sure that you actually have qualified people for the tasks they need to do, so you might end up having to payer higher salaries for competent staff.

Both initiatives are good news in principle. As with all the other grand plans, the real challenge will be in the implementation. For most tax payers, this should be a positive development. But of course there will be much resistance to these plans, chiefly from those who will be immediately affected by the staff reductions. Understandably so. Nobody likes losing their job. Even though the government has stated that people would be offered voluntary early retirement, there will no doubt still be some significant resistance, and not all job cuts may be possible through this measure. Being offered entrepreneurship training is also little consolation: becoming an entrepreneur is difficult and not for everyone, especially so if you attempt it after years of public employment.

In addition, there is bound to be resistance not only from the people who stand to lose their jobs, but also from those people who repay favours – or book new favours – by distributing parastatal jobs. There are already mutterings about William Ruto’s URP and tribes mates not being enough substantial positions under the new administration, so cutting down the opportunities for handouts is unlikely to lead to much excitement either.

Will President Uhuru be able to push this through? After all, he had not been able to make MPs and county assembly members accept the salaries that had initially been budgeted for them, and could not stop them from blackmailing the tax payer through months of strikes. Had he done that, and fully backed Serem’s SRC, he would have already put a useful lid on unproductive public spending.

As an editorial in the Standard also pointed out, the rationalisation of the civil service should have been done alongside devolution planning – and devolution is costly business, at least as long as the counties don’t show that they are better managed, and generate more economic growth, than under the old system. Kenya had a surge in public spending thanks to the transition to devolved government and the introduction of a senate: now taxpayers also have to pay for governors, senators, country assemblies and so on. Aside from collecting comfortable salaries and (importantly, so very importantly) all sorts of allowances, those people also seem to think that buying cars and going on foreign trips are development expenditures. Well, not developmental for the overall population – certainly it is very developmental for the wealth of governors/senators/MPs/other sidekicks. There is also the question of ghost workers – they appear to have been in rude health over the years and the fact that they exist in such large numbers is of course not a mere lack of oversight, but due to a corrupt system.

It will be a long, hard slog to clean this up, and even then there’s a fair risk that funds saved will not go to such vital services as healthcare, education and security.


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