PUBLIC CORPORATIONS.
Public corporations in Kenya are government-owned entities that operate in various sectors to
provide public services and contribute to economic development. These corporations are typically
established through specific legislation and are governed by boards or councils. Here's a list of
some public corporations in Kenya with a few examples:
1. Kenya Power and Lighting Company (KPLC) - Responsible for electricity generation and
distribution.
2. Kenya Ports Authority (KPA) - Manages the country's seaports, including the Port of
Mombasa.
3. Kenya Railways Corporation - Operates and manages railway transport services.
4. Kenya Airports Authority (KAA) - Oversees airports, including Jomo Kenyatta
International Airport.
5. National Oil Corporation of Kenya - Deals with the exploration, production, and marketing
of petroleum and related products.
6. Kenya Wildlife Service (KWS) - Manages and conserves wildlife and protected areas.
7. Kenya Broadcasting Corporation (KBC) - The state-owned broadcaster for radio and
television.
8. Agricultural Finance Corporation (AFC) - Provides financial services to the agricultural
sector.
9. National Housing Corporation (NHC) - Promotes and facilitates affordable housing
solutions.
10. Kenya Meat Commission (KMC) - Deals with meat processing and marketing.
11. Kenya Electricity Generating Company (KenGen) - Focuses on electricity generation from
various sources.
Formation of Public Corporations.
In Kenya, the formation of public corporations is typically governed by specific legislation and
follows a prescribed legal process. Here are the general steps and key aspects of how public
corporations are formed in Kenya:
1. Enactment of Legislation: The creation of a public corporation begins with the passage
of an enabling law, typically an Act of Parliament. This legislation outlines the objectives,
powers, and governance structure of the corporation.
2. Ministerial Responsibility: A specific government ministry or department is usually
responsible for overseeing the establishment and operations of the public corporation. This
ministry provides guidance and support during the formation process.
3. Establishment Documents: The specific law that establishes the corporation will provide
details about its name, objectives, governance structure, and any other pertinent
information. This law is often referred to as the corporation's charter or Act.
4. Board of Directors or Council: Public corporations are governed by a board of directors
or council appointed by the government. The board is responsible for setting policies,
making strategic decisions, and overseeing the corporation's operations.
5. Capitalization: The government may allocate an initial capital injection or funding to start
the corporation's activities. This funding could come from the national budget, grants, or
loans.
6. Registration: The public corporation is registered as a legal entity, typically as a body
corporate, with its own legal identity separate from the government.
7. Staffing and Leadership: The corporation recruits its staff, including management and
employees, who are responsible for executing the corporation's functions and objectives.
8. Operationalization: Once formed, the public corporation begins its operations, which
could include providing public services, managing assets, or engaging in activities related
to its specified mandate.
9. Reporting and Accountability: Public corporations are required to report on their
activities and financial performance. They are subject to auditing and accountability
measures to ensure transparency and compliance with the law.
10. Ongoing Governance: The appointed board or council plays a crucial role in the
corporation's ongoing governance, ensuring that it fulfills its mandate effectively and
efficiently.
Sources of Finances.
Public corporations in Kenya obtain their finances from various sources to support their operations
and fulfill their mandates. Some of the common sources of finances for these entities include:
1. Government Budget Allocation: The Kenyan government allocates funds to public
corporations as part of the national budget. This allocation is typically made based on the
corporation's mandate and the services it provides.
2. Revenue from Services: Public corporations generate revenue from the services they offer
to the public. For example, Kenya Power generates income from electricity sales, and
Kenya Railways collects fares and freight charges.
3. Borrowing: Public corporations may raise funds through loans or bonds issued in the
capital markets. These funds can be used for infrastructure development, expansion, or
other capital-intensive projects.
4. Grants and Donor Funding: Some public corporations receive grants and funding from
international development partners, NGOs, or donor organizations. These funds may be
directed toward specific projects or initiatives.
5. Retained Earnings: Public corporations may reinvest a portion of their profits or retained
earnings into their operations, allowing them to fund capital projects and operational
expenses.
6. Subsidies: In some cases, the government provides subsidies to public corporations to
offset operational costs or make specific services more affordable to the public. For
instance, the government may subsidize agricultural inputs through the Agricultural
Finance Corporation (AFC).
7. Asset Sales: Public corporations can generate revenue by selling assets or leasing
properties or resources. For example, the Kenya Ports Authority may lease land or facilities
to private entities.
8. Grants from the Government: The government may provide grants to public
corporations for specific purposes, such as supporting research and development or
carrying out particular projects.
9. User Fees and Charges: Many public corporations charge fees or levies for the use of
their services, facilities, or resources. For instance, the Kenya Airports Authority collects
landing and parking fees from airlines.
10. Investments: Some public corporations invest their funds in various financial instruments
or ventures to generate additional income. These investments can include securities, stocks,
or real estate.
Advantages and disadvantages of public corporations.
Advantages:
1. Fulfillment of Public Services: Public corporations are often established to provide
essential public services, such as electricity, water supply, healthcare, and education,
ensuring that these services are accessible to the entire population, even in remote areas.
2. Government Control: Public corporations allow the government to have direct control
and influence over key sectors of the economy, which can be essential for strategic and
national interest reasons.
3. Infrastructure Development: They can drive infrastructure development by investing in
and maintaining critical infrastructure, such as transportation networks, utilities, and
communication systems.
4. Job Creation: Public corporations create jobs and employment opportunities, contributing
to economic stability and reducing unemployment rates.
5. Steady Revenue Streams: Many public corporations generate steady revenue, which can
be used to fund public services, infrastructure projects, and other government initiatives.
6. Economic Stabilization: In certain situations, public corporations can act as
countercyclical instruments, helping to stabilize the economy during economic downturns
by maintaining essential services and jobs.
Disadvantages:
1. Inefficiency: Public corporations can sometimes suffer from inefficiency and bureaucracy,
leading to suboptimal service delivery and resource misallocation.
2. Political Interference: They are susceptible to political interference, which can lead to
decisions based on political considerations rather than economic or operational efficiency.
3. Lack of Innovation: Public corporations may be less innovative than private enterprises,
as they may not face the same competitive pressures to innovate and improve services.
4. Financial Sustainability: Some public corporations run at a financial deficit and depend
on government subsidies or bailouts, leading to potential fiscal challenges for the
government.
5. Corruption and Mismanagement: Mismanagement and corruption can be more
prevalent in public corporations, leading to wastage of resources and public funds.
6. Limited Accountability: Public corporations can sometimes lack transparency and
accountability, making it difficult to hold them responsible for poor performance or
financial misconduct.
7. Monopolistic Tendencies: Public corporations may enjoy monopoly status in certain
sectors, which can result in reduced competition, limited consumer choice, and potentially
higher prices.
Circumstances under which Public Corporations might be dissolved in Kenya.
Public corporations in Kenya are established by specific legislation, and they can be dissolved or
terminated under certain circumstances as outlined in the enabling laws or through government
decisions. The circumstances under which public corporations in Kenya can be dissolved by the
government may include:
1. Expiration of the Enabling Act: If the legislation that established a particular public
corporation includes a provision for its dissolution after a specified period or upon the
achievement of its objectives, the corporation may be dissolved automatically when the
specified conditions are met.
2. Change in Government Policy: The government may decide to dissolve a public
corporation if it determines that the entity no longer aligns with its policy goals or strategic
objectives. This could result from shifts in government priorities or a change in political
leadership.
3. Financial Insolvency: If a public corporation is unable to meet its financial obligations
and becomes financially insolvent, the government may choose to dissolve it to prevent
further financial losses or to protect public funds.
4. Inefficiency and Poor Performance: Persistent inefficiency and poor performance,
leading to the inability of the public corporation to fulfill its mandated functions, could be
a reason for its dissolution. This decision may come after attempts to reform or restructure
the entity have proven ineffective.
5. Corruption and Mismanagement: If a public corporation is plagued by corruption,
mismanagement, and financial misconduct that cannot be effectively addressed through
other means, the government may opt for dissolution to curb these issues.
6. Mergers and Restructuring: In some cases, public corporations may be dissolved as part
of a broader government strategy to merge or restructure entities to achieve greater
efficiency and effectiveness in service delivery.
7. Privatization: The government might decide to privatize certain public corporations by
selling them to the private sector. In such cases, the public corporation would be dissolved,
and its functions or assets transferred to private entities.
8. Redundancy: If the public corporation's functions have become redundant due to changes
in market dynamics or technological advancements, the government may decide to dissolve
it and reallocate resources to more relevant sectors.
Here are some examples of public corporations in Kenya that were dissolved or underwent
significant changes for various reasons:
1. Kenya Posts and Telecommunications Corporation (KPTC): This corporation,
responsible for postal and telecommunications services, was dissolved in the late 1990s. It
underwent a restructuring process, resulting in the separation of its functions into the Postal
Corporation of Kenya (PCK) and Telkom Kenya (formerly known as Kenya
Telecommunications Corporation, KTC). The dissolution aimed to introduce competition
and improve efficiency in the telecommunications sector.
2. Kenya Meat Commission (KMC): The Kenya Meat Commission has faced financial and
operational challenges, leading to discussions about its potential privatization or
restructuring. While it has not been dissolved, its future has been the subject of ongoing
debate due to concerns about inefficiency and mismanagement.
3. Kenya Sugar Authority (KSA): The Kenya Sugar Authority, which was responsible for
regulating the sugar industry, was dissolved, and its functions transferred to the Agriculture
and Food Authority (AFA). This restructuring aimed to streamline regulatory functions
and improve oversight of the sugar sector.
4. Kenya National Shipping Line (KNSL): KNSL, which was involved in shipping and
maritime transport, was privatized in the 1990s. The government transferred its shares to
the private sector as part of broader economic liberalization and privatization efforts.
5. Hilton Hotel Nairobi: The Hilton Hotel in Nairobi was privatized by the government in
2002, transferring ownership and management to private investors. This was part of the
government's privatization program to reduce its involvement in the hotel industry.