Institute for Development Studies, University of Nairobi

The paper examines the performance of eight parastatals which share the goal of fostering development of one or more sectors of the economy primarily via equity participation in joint ventures with the private sector, or via loan schemes. The firms examined include ICDC, DFCK, IDB, KTDC, ADC, KIE, NCC and KNTC. The paper examines the terms on which the parastatals have made finance available to their clients, their managerial efficiency, and their profitability. The performance of manufacturing firms which are subsidiaries of the parastatal firms is compared with performance of purely private manufacturing firms. The paper shows that the performance of the firms has varied widely, but several of the firms have made important positive contributions to the Kenyan capital market, allocating their investment funds to projects which are or average commercially viable and economically competitive.