LISTED PARASTATALS

State should sell its shares on the NSE

In Summary

• The NSE estimates that Sh1.2 billion could be raised if government sold off its shares in listed companies

• Kenya has just agreed a controversial IMF facility for Sh255 billion, less than a quarter of what could be raised on the NSE

NSE chief executive Geoffrey Odundo monitors the daily tradings at the NSE headquarter on August 22.
NSE chief executive Geoffrey Odundo monitors the daily tradings at the NSE headquarter on August 22.
Image: ENOS TECHE

The Nairobi Securities Exchange has suggested that government shoujd sell its shares in listed companies to plug budget deficits (see P7).

As a general principle, governments do not need to hold shares in companies that have no unique strategic national value.

There are many successful banks in Kenya so the government does not need to retain shares in KCB. The same applies to the National Oil Corporation and other listed companies.

The situation becomes more complex with monopolies like Kenya Pipeline, Kenya Airports Authority and Kenya Ports Authority but similar companies have been successfully privatised globally.

 Critics will argue that these shares should not be sold while companies are paying dividends to government. Conversely, if they are sold and become truly independent, they should become more profitable and pay more tax to government.

There is a furore today over a new IMF facility worth Sh255 billion. Yet the NSE proposal would quickly raise over Sh1.2 trillion through selling off various assets. If we did so, we would not need to go to the IMF.

Government should accept the NSE proposal and sell off all its shares in listed companies.

Quote of the day: "If you're going through hell, keep going."

Winston Churchill
He resigned as Prime Minister of the UK on April 7, 1955