Power play as Jubilee acts to take over state firms

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President Kenyatta with the task force at State House Nairobi last week. Photo/FILE 

By MUTHOKI MUMO mumumo@ke.nationmedia.com
Posted  Monday, July 29   2013 at  17:46

Former National Social Security Fund (NSSF) boss, Mr Tom Odongo, last week became the latest casualty of power play as Jubilee government moves to tighten its grip on state bodies.

Labour secretary, Mr Kazungu Kambi, leaked his sacking letter to the press without stating the basis of his action.

On Friday, Mr Odongo moved to court to challenge the move. He joins a growing list of big names in government institutions and state corporations that have been sent packing since the Jubilee government assumed power.

The list is expected to grow even lengthier in the coming months in what seems to be a wave of systemic purge being carried out on state institutions and parastatals.

Providence also seems to have conspired to hand the government a clean slate given that several bosses of key institutions, especially in the energy sector, have retired in the last three months or plan to head home before the end of the year.

State house last week acknowledged its ongoing clean up by launching a task-force to reform the policy with respect to state corporations.

Revive parastatals

The 10-member team has now been vested with the responsibility of providing proposals to revive parastatals that have in many cases turned into post-colonial fossils. These proposals, expected no later than September, should turn them into drivers of Kenya’s development goals.

“We are focusing on widespread reforms that will infuse new life to our parastatals,” said President Uhuru Kenyatta.

And there is need for change in Kenya’s state corporations and institutions. Over the decades, many of them have been mired in scandals that have cost the taxpayer billions of shillings.

Mr Odongo is the seventh managing trustee to serve NSSF in a period of five years. The high turnover is attributable to scandals that have rocked the fund and to the fact that politicians have often viewed it as a cash cow.

Before he was sacked from the helm of the Kenya Meat Corporation (KMC) in May, Mr Isaak Haji stood accused of poor performance, breach of procurement rules and failure to implement resolutions made by directors. Mr Haji later moved to court to reverse the decision and he is now steering KMC.

Noble intentions

“Mismanagement, bureaucracy, wastage, incompetence and irresponsibility by directors and employees are the main problems that have made State Corporations (SCs) fail to achieve their performance,” reads a 2011 paper by Ms Alice Miring’u and Ms Esther Muoria in the International Journal of Business and Public Management.

There are, however, concerns that these new noble intentions mask familiar traits of cronyism. In the energy sector, where four powerful parastatals have been left headless, the Jubilee government has been taken to task for appointing acting bosses from President Kenyatta’s and Deputy President William Ruto’s home turfs.

In an article two weeks ago, the Saturday Nation pointed out that the Kenya Electricity Generating Company’s (KenGen) Eddy Njoroge has been replaced with Simon Ngure. In the Rural Electrification Authority (REA), the post that will soon be left vacant by Zachary Ayieko has been earmarked for Ng’ang’a Munyu.

Deputy President Ruto has received his share of the cake in Kenya Power and the Kenya Pipeline Corporation where Mr Ben Chumo and Mr Charles Tanui have both been given acting positions at the helm.

The task-force set up by President Kenyatta to review parastatal policy draws widely from both the private and the public sector. Treasury principal secretary, Mr Kamau Thugge, has a post on the team as do Kenya Private Sector Alliance (Kepsa) boss Ms Carole Kariuki and Vision 2030 Director-General, Mr Mugo Kibati.

One of the appointments to the taskforce, however, does raise eyebrows. It will be co-chaired by former Member of Parliament Mr Abdikadir Mohamed and Commercial Bank of Africa (CBA) group managing director, Mr Isaac Awuondo.

The Kenyatta family has significant stake in CBA and the President’s brother, Mr Muhoho Kenyatta, sits on the CBA board. Therefore, Mr Awuondo’s appointment may present a conflict of interest.

Taking advantage

If the Jubilee government is in fact taking advantage of the high turnover in parastatals in order to make politically-expedient appointments, it will be repeating mistakes that have been made by every successive government since independence.

“When a new government comes in, it has always wanted to fill positions in lucrative parastatals. This is where they put their people,” said a local academic who requested anonymity.

And there is a lot at stake for the Kenyan people in these appointments. In the energy sector, KenGen, Kenya Power and KPC last year reported combined sales of Sh77.5 billion and Sh20.3 billion in profit. REA is currently fighting for a bigger budget to install electricity in rural schools in line with Jubilee promises to provide primary school children with solar-powered laptops.

KenGen is at the heart of a plan to upgrade Kenya’s electricity generation capacity to 15,000 megawatts  in a project that is expected to cost at least Sh3.3 trillion. The Kenya Ports Authority, whose boss is under threat of sacking, is going to perform a key role in the management of the planned  Lamu Port.

Cusp of transformation

Mr Odongo was sacked from NSSF at a time when the fund is on the cusp of a transformation that is expected to increase member contributions. NSSF is also planning a 30,000 unit housing project in Mavoko, near the planned Konza Technopolis. It is also developing many of its idle land in city with a planned 100 apartments in Nairobi’s Milimani Estate at a cost of Sh1.6 billion.

NSSF is also building a 39-storey building in the city centre at a cost of Sh6.7 billion. The project will involve the construction of a 31-storey office tower at the existing Hazina Trade Centre, currently hosting Nakumatt Lifestyle branch, currently an eight-storey. NSSF controls over Sh126 billion and collects over Sh600 million monthly from its 1.5 million members.

The National Hospital Insurance Fund, whose board and management the Cabinet Secretary for Health has threatened to send home, will be crucial to the government’s plan to provide universal access to quality health services.

If the government truly wants to transform these institutions, some experts say, the first step should be divorcing them from their parent ministries and politics thereby ending an exploitative union. If political intrigue is taken away from appointments made in state corporations and their day-to-day running, they could be free to perform with efficiency akin to their private sector counterparts.

Appoint own henchmen

“Interference by politicians is what is eating these state corporations. Ministers used to appoint their own henchmen to run parastatals. These henchmen are not accountable to performance criteria,” said Deloitte East Africa chief executive, Mr Sammy Onyango.

According to him, all state corporations should be taken out of the purview of line ministries.

As in the case of China, he says, an independent body should be created to set performance and enforce performance criteria for state corporations, separate from the government.

Further, there have been calls to amend the State Corporations Act which lumps together institutions as varied as regulatory authorities and universities under one umbrella.

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Where executive jobs are up for grabs

Kenya Pipeline Corporation
In May, Mr Selest Kilinda was dismissed from the post of managing director of the Kenya Pipeline Corporation after charges of nepotism were levelled against him and several senior officials. The decision to sack him was backed by a National Assembly committee last week.

National Hospital Insurance Fund

Health Cabinet Secretary James Macharia has warned that directors at the National Hospital Insurance Fund (NHIF) and all other institutions under the ministry face the axe. This follows the revelations that NHIF was embroiled in yet another multi-billion shilling scandal — this time involving a decade-old plan to construct a hospital.

National Social Security Fund

The managing trustee, Mr Tom Odongo, was sent home last week by Labour Cabinet Secretary Kazungu Kambi. He has since moved to court against Mr Kambi claiming that the procedure was not followed in termination of his contract.

Rural Electrification Authority

Zachary Ayieko is current chief executive officer. However, his term will expire in August. Mr Ng’ang’a Munyu, the former general manager corporate planning, has been appointed in an acting capacity.
Kenya Electricity Generating Company

Mr Eddy Njoroge went on early retirement in June, two years before the expiry of his term, leaving the post of chief executive officer vacant. KenGen’s former regulatory affairs director Simon Ngure is now acting CEO.

Kenya Power

Mr Joseph Njoroge quit the managing director’s post after he was nominated to join Uhuru’s cabinet as Energy principal secretary. Mr Ben Chumo is currently the acting managing director.

Energy Regulatory Commission

The current director-general, Mr Kaburu Mwirichia, will finish his second term on August 21. Since he cannot serve more than two terms, the government will need to head-hunt for a replacement.

Kenya Meat Commission

In May,  the commissioner, Mr Isaak Haji, and the board chair Abdi Suleiman were sent home. Allegations against Mr Haji included poor performance and flouting procurement laws. Mr Haji went to court and halted the dismissal on grounds that right procedure had not been followed.

ICT industry

The Kenya ICT Board lost its boss after Mr Paul Kukubo left earlier this year to join the East Africa Commodity Exchange in Rwanda. The board is also in a state of flux following a presidential directive that it be merged with the e-government directorate and the Government Information Technology Service.

Kenyatta National Hospital

The referral hospital lost its CEO Richard Lesiyampe, after he became the Environment principal secretary. The acting chief executive is Mr Simeon Monda. KNH has already begun the recruitment of a new boss.

Kenya Railways Corporation

The corporation’s managing director Nduva Muli is now the Transport principal secretary. A new managing director will have to navigate a changing environment as Kenya plans to build a standard gauge railway.

Kenya Ports Authority

The managing director, Mr Gichiri Ndua, has been put on notice by Transport and Infrastructure cabinet secretary Michael Kamau. Mr Kamau said he had authored an undated letter of sacking which will be dispatched unless Mr Ndua fights corruption and makes headway in delivering Jubilee promises to ease operations at the port.

Kenya Airports Authority

KPA has been put on a similar notice as the Kenya Ports Authority. Mr Kamau said that the KAA would be given more responsibilities. Failure to improve efficiency and kill cartels at the airport will see KAA top officials head home.

Tea Board of Kenya

Ms Sicily Kariuki left her post as CEO of the Board to join the government as the Agriculture principal secretary. Incidentally, Ms Kariuki also serves on the board of the Commercial Bank of Africa.