The Politics of Public Enterprise Privatization: The Role of Clientelism with Special Reference to Kenya

Abstract

Privatization of public enterprises is increasingly becoming a topical issue in many developed and developing countries. Privatization in many developing countries, has been initiated as a donor conditionality for various socio-political and economic reasons. Kenya is one such country that has adopted this privatization strategy. However, the process of implementing the privatization of public enterprises has been rather slow. The central purpose of this study therefore, is to investigate the factors accounting for the slowness on the part of the government in implementing the privatization of public enterprises. The major proposition forwarded is that, clientelism plays a role in affecting privatization of public enterprises. In other words, there is a relationship between clientelism and the privatization of public enterprises. Using clientelism, in particular the patron-client approach as a conceptual framework for analysis, it has been pointed out first and foremost that clientelism affects privatization of public enterprises in developing countries. Drawing examples from various developing countries of Asia, Latin America and Africa, it has been demonstrated that there is a relationship between clientelism and privatization, with regard to political patronage gains and losses. Where political patrons perceive political patronage losses accruing from the privatization of certain public enterprises, then their governments are not willing to privatize such public enterprises. Where political pat rons perceive no such losses, then their governments are willing to privatize such public enterprises. With regard to Kenya, it is demonstrated that through clientelism, public enterprises are used for political patronage purposes. Through clientelism, political patrons in Kenya have been able to gain direct and indirect access to public enterprise patronage resources, which are thereafter dispensed to clients in return for political support. Poitical patons use public enterprise resources to reward or punish clients, in return for political support. Public enterprises are therefore sources of political power for political patrons. It is in this context that those political patrons responsible for the implementation of privatization, especially the politicians and political bureaucrats, are unwilling to facilitate the implementation of privatization for they perceive major political patronage losses accruing from privatization, which will subsequently affect their political power. This is particularly so for those public enterprises that command vast resources of political patronage. Hence, the unwillingness or lack of political commitment on the part of the government to privatize such public enterprises. The minor prorosition forwarded in this study is that profit performance of an enterprise also affects its privatization. Though the theoretical proposition is that governments are not willing to privatize those public enterprises that make a profit, as profit is an important source of revenue, it has nevertheless been demonstrated that in Kenya, the emphasis by the government is to privatize those public enterprises that make profit. In this regard, it has been recommended that a State Corporations Services Commission be established to reduce political interference in the appointment of public enterprise chief executives. With reference to the privatization process, it has been recommended that a "non political" privatization committee, legal measures, compensation schemes and an enabling political environment be established to minimise political interference and facilitate a transparent process.