MPs cement say in sale of public firms

Two House committees have approved the Privatisation Bill, 2025, but with significant amendments to increase transparency, safeguard national assets and protect public interests.

Committees on Finance and National Planning and Public Debt and Privatisation have proposed changes to address concerns raised by stakeholders during public participation forums held across 24 counties.

The Bill, sponsored by National Assembly Majority leader Kimani Ichung’wah, seeks to repeal and replace the Privatisation Act, 2005, and establish a new legal framework for the sale of public entities.

It comes in the wake of the High Court’s nullification of the Privatisation Act, 2023, which was declared unconstitutional due to inadequate public participation and a controversial 'deemed approval’ clause.

The Bill has been crafted to strengthen parliamentary oversight, abolish the current appeals board, and establish safeguards for the assets and employees of the affected entities.

“In the annulled Privatisation Act, 2023, section 22(5) had provided for a "deeming provision" where if Parliament had failed to ratify the privatisation programme, then it would have been deemed to have been approved,” the report reads.

“The Bill specifies the timeframe within which the National Assembly shall consider the privatisation programme. Therefore, the committees recommended that the timeline be increased from 60 days to 90 days.” 

The committees have proposed that the National Assembly must approve not only the privatisation programme but also individual privatisation proposals.

This move is intended to prevent executive overreach and ensure legislative oversight at every stage of consideration of a privatisation process.

The lawmakers have also removed the proposed Privatisation Appeals Board, saying it contravenes the very court ruling that staged the amendments.

The committees cited a High Court ruling that such tribunals should fall under the Judiciary to ensure independence and uphold the right to a fair hearing. Appeals will now be directed to the High Court.

The Bill will also be amended to explicitly protect strategic national assets and national security interests.

Factors such as the strategic nature of assets, risks of foreign dominance and impacts on public welfare must be considered before privatisation.

In the changes, the validity period for a privatisation programme has been reduced from eight to four years, aligning with the tenure of the Privatisation Authority Board and ensuring timely implementation.

MPs have also moved to enhance public participation and transparency, calling for full disclosures in valuations, share allocations and agreements.

“Article I18 of the Constitution obligates Parliament to facilitate public participation and involvement in the legislative and other business of Parliament and its committees,” the report reads.

“Further, under the Standing Orders, the National Assembly conducts public participation on businesses before it, and the consideration of the privatisation programme would not be an exception.” 

On the protection of citizens’ interests, the changes will specify criteria for limiting foreign participation in privatisations, including considerations of national security, economic empowerment of citizens and prevention of monopolies.

For employees, although the committees noted that existing clauses and employment laws provide sufficient worker protections, they acknowledged public concerns and fears.

MPs have thus recommended that employee welfare be addressed on a case-by-case basis during implementation.

During countywide public hearings, members of the public expressed support and anxiety about the Bill.

Supporters of the proposed law argued that privatisation would improve efficiency, reduce government debt and attract investment.

Opponents, however, cited fears of job losses in the changes, corruption and the loss of national assets to foreign investors.

But MPs moved to ensure the Bill’s clauses provide for an employee protection mechanism. “The committees were of the view that this was adequate,” the report reads.

Notably, groups such as the Mau Mau descendants called for community equity shares and benefit trusts from privatisation proceeds, especially for regions hosting privatised entities.

The Bill is now before the National Assembly for debate and voting in plenary.

If passed with the proposed amendments, it will establish the Privatisation Authority to oversee the sale or restructuring of state-owned enterprises.

The central aim is to improve efficiency, reduce fiscal burdens and promote economic growth.

The joint committee report concludes, “The Bill provides the legal framework and most concerns would be addressed in each privatisation programme and privatisation proposal.”

INSTANT ANALYSIS

The Bill, a reboot of the 2023 Act nullified by the High Court, establishes a new framework for selling state firms. Critical changes cement Parliament's role, requiring approval of the privatisation programme and individual sales, and scrapping a controversial "deemed approval" clause. The proposed Privatisation Appeals Board was removed on constitutional grounds, directing appeals to the High Court instead.