The Context of Privatization in Kenya examines how privatization has been carried out in Kenya since 1987 in terms of the laws, institutions, processes and individuals involved. It argues that were privatization to be undertaken in a context where the rules of the game are clear and the institutions which encourage competition in the buying of public assets well set up and known, privatization could be used as a tool for kick starting economic growth. As it were, and from the experience so far, Kenyans are prone to conclude that it is mainly a clique of the rich and politically well connected who have been able to harvest the fruits of privatization from a process that remains largely opaque.
Investors are usually more willing to invest in impersonal markets where property rights are protected, contracts less costly to enforce and government policies relatively credible. Property rights will be protected, contracts enforced and government credible when laws are in place to register and enforce rights and obligations; when constitutional, legislative and electoral rules make it hard to change laws and procedures arbitrarily, and when legal and bureaucratic systems function effectively, efficiently and relatively honestly.
The studies in this book show that privatization has been jeopardized in Kenya due to weak institutions, laws that are easily ignored, and laid down procedures that are undermined without serious penalties from established authority. Prior to undertaking privatization in such situations, it is necessary to look carefully into these contextual issues and ensure that necessary laws, regulations and institutions are in place.
In the year 2000, it is still early enough to arrest the process of privatization from being the launching pad for a lootocracy in Kenya by undertaking appropriate reforms in the law, the procedures, the institutions and the assumed values. Russia has already been plunged into serious political and economic chaos by allowing an oligarchy to arise out of a flawed process of privatization. Such an oligarchy could easily use monopolistic economic power in Kenya to stop the process of democratization in its tracks.