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{
"id": 1283578,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1283578/?format=api",
"text_counter": 293,
"type": "speech",
"speaker_name": "Molo, UDA",
"speaker_title": "Hon. Kimani Kuria",
"speaker": null,
"content": "of politicians is getting votes. Therefore, when faced with a decision to get votes or enhance an institution's efficiency, a politician will always choose votes. That is why, as per the Public Choice Theory, public-owned entities fade. Therefore, they are privatized in the country's best interest. The second is the Property Rights Theory, which says that shareholders are residual claimants to profits in an enterprise or company. If I am a shareholder in a company and I sit on the board of that company, I want to get more profit from that institution. Now, who are those who sit on the boards of these companies? Most of the time, the shareholder called the Government of Kenya is represented on the board by either the Principal Secretary or Cabinet Secretary of that particular line ministry. The problem with this is, in private enterprise, as a shareholder, you want to maximise your profit, but here the profit does not come to you as a person. Therefore, the effort you would expect that particular Cabinet Secretary or Principal Secretary to put in that particular institution is minimal. These additional responsibilities do not accrue additional revenues for that particular officer. Thirdly, we have the Agency Theory, which indicates that managers always try to maximise their utility. As a manager, your best interest is not necessarily that of the shareholder. It is that of yourself as a manager of that institution. This Agency Theory is well taken care of in the private sector because there is a competitive market for those managers. The managers are competitively sought after in the market. There are incentives given, including salaries and shareholding in those companies. You should check the salaries paid to the Chief Executive Officers (CEOs) of those institutions in Kenya. The other day, we were conversing with a colleague I was with in university who has risen through a financial institution's ladder. I was surprised at how much money he is making in a month. To imagine that Members of Parliament are well paid; there are very many officers out there who are paid unimaginable salaries. That reward system takes care of the challenges of Agency Theory. However, in public-owned institutions, officers have to adhere to the job group structure. Even if the public-owned enterprise makes so much money, there is no reward system, either in terms of shares or better remuneration for the officers. Therefore, there is minimal motivation for the officers serving in those institutions. The Bill had proposed something that the Committee flagged out. There would be a privatisation programme that states which institutions will be privatised, when and how. Interestingly, the Bill excluded the approval of Parliament. During the Committee of the whole House, I will move an amendment to include a proviso that the National Assembly must approve the privatisation programme. We have seen a myriad of problems in the privatisation sector. Later this afternoon, we will be debating the measures being put in place to revitalise sugar companies. It is a pity that the whole of the western region, which relied solely on sugarcane growing, has uprooted their sugarcane, and they have no interest whatsoever in the sugar business. I thank Hon. Wangwe for the steps he has taken. We will discuss that Bill later this afternoon and ensure we revitalise these particular institutions. The Bill before the House now will serve four important things: One, provide for coordination and oversight of privatisation matters. It is key to note that these institutions were created using taxpayers' money. These institutions are the sweat of Kenyans who paid through taxation to have them established. It is only fair that we have a proper legal framework that provides coordination and oversight of the privatisation process. Two, this Bill seeks to establish the formulation of the privatisation programme. Third, the Bill provides for the implementation of the programme. Fourthly, the Bill establishes how privatisation agreements will be contained and implemented. We have had a Privatisation Commission in existence for almost 15 years. It was disappointing when we met these stakeholders. We asked them, 'For the last 10 years, what The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
}