Political patronage and privatization of public enterprises: A comparative study of Kenya and Rwanda

Abstract

This study is a comparative analysis of privatization of public enterprises in Kenya and Rwanda. The study seeks to assess the relative influence of patronage and economic considerations on the exercise of public enterprise privatization in the two countries and the impact of the confluence of the two variables on the realization of the goals of privatization. The study has established that Kenya and Rwanda have initiated a policy to privatize both performing and non-performing enterprises. The decision to privatize was based on convergence of the interests of donor countries, international financial institutions and the governments of the two countries. Privatization in the two countries was therefore a result of both political and economic considerations, but political patronage played a more central role than economic thinking. The problems that faced Public Enterprises in Kenya and Rwanda were largely mismanagement, and political interferences in the day-to-day operations of the enterprises. The problems were compounded by structural difficulties in the economy of each of the two countries. The solutions to the problem of poor performance of PEs therefore lie in the issues and not in ownership of the enterprises. Privatization largely answers the question of ownership rather than management or performance of the enterprises, and fails to merit therefore as panacea for an ailing economy and poorly performing enterprises .