Kenya court blocks sale of state firms after opposition petition

The Kenyan High Court has suspended the sale of 11 parastatals after opposition leader Raila Odinga’s Orange Democratic Movement (ODM) party challenged the decision.

ODM argues that the sale should be subjected to a referendum because of strategic importance of the state firms that have combined assets worth a staggering Ksh200 billion ($1.31 billion).

High Court Judge Chacha Mwita ruled that the petition by ODM raises substantial constitutional and legal issues of public importance that require critical examination and consideration by the court.

The judge directed ODM party to serve the petition upon the Speaker of National Assembly Moses Wetang’ula, Attorney-General Justin Muturi and Treasury Cabinet Secretary Prof Njuguna Ndung’u immediately with the court documents.

“A conservatory order is hereby issued suspending implementation of section 21(1) of the Privatisation Act 2023 and or any decisions made pursuant to that section, until February 6, 2024,” the judge said.

The opposition outfit said the state-owned companies lined up for sale are of strategic importance to the people of Kenya and can only be privatised with the consent of the people through a referendum.

“The petitioner is particularly apprehensive that the impugned Act (Privatisation Act) arrogates near absolute powers to the Cabinet Secretary, National Treasury and Economic Planning, and by extension, the Executive in the privatisation of sovereign assets and further elevates subjective economic perspectives of privatisation above entrenched and non-derogable values and principles of governance under the constitution, including sovereignty of the people, democracy and accountability,” ODM said in the petition.

The opposition party says the significance of the national principles and values of governance are not and cannot be subordinate to subjective economic perspectives of privatisation.

Through lawyer Jackson Awele, ODM said the decision to privatise sovereign assets ought to be subjected to a higher threshold of public participation like a national referendum.

According to ODM, the provisions of the Act do not provide for any or adequate security guarantees or system of checks and balances for the integrity of the purported privatisation programmes as intended by the Constitution.

The party said the Act is deliberately designed to facilitate whimsical, absolute and irrational decision making in the sale of public assets and is accordingly not in the public interest.

“A declaration that some public assets including but limited to the Kenyatta International Convention Centre (KICC), the Kenya Pipeline Company (KPC), the Kenya Literature Bureau (KLB) and the Kenya Seed Company Limited (KSC) form part of the sovereign wealth of the Republic of Kenya with significant cultural and strategic importance to the people of Kenya and can only be privatised with the consent of the people at a referendum,” the ODM said.

ODM further argued that it is public knowledge that KICC was gazetted as a national monument on July 26, 2013 through a gazette notice number 10686 of 2013.

The party further says public assets such as the KLB, Kenya Seed Company and KPC are strategic installations central to Kenya’s national security.

“Their sale accordingly elicits national security concerns that directly threaten the sovereignty of the people and Republic of Kenya,” ODM executive director Oduor Ong’wen said in an affidavit supporting the petition.

The opposition party asked the court to issue temporary orders suspending the implementation of the Privatisation Act and the programme or decisions made pursuant to the Act.

“The significance of the national principles and values of governance are not and cannot be subordinate to subjective economic perspectives of privatisation and that the decision to privatise sovereign assets ought to be subjected to a higher threshold of public participation to wit, a national referendum,” Dr Ong’wen said.

He argued that the Act was passed without effective public participation yet the harm or damage that shall be caused to the public interest will be disproportionate to any inconvenience or damage, if any, which will be caused to any person by suspending the implementation of the amendments.

“Failure to grant the said orders will cause disproportionate prejudice or loss of prized sovereign assets of the Republic of Kenya at the detriment of the people,” Dr Ong’wen added.

Pursuant to the section 21 (1) of the Privatisation Act, Prof Ndung’u published the privatisation programme that outlined the parastatals earmarked for sale.

Prof Ndung’u then invited members of the public to submit their views on the programme after which, he will present it to Cabinet for approval.

ODM argued that there is no demonstrable urgency to justify the intended rushed sale of the listed parastatals or any plausible reasons that outweigh the peremptory constitutional questions raised in the petition.

“At best, the only ostensible justification for the intended sale is the reported conditionalities imposed by the World Bank and the International Monetary Fund for the sale of state corporations to repay alleged foreign debt obligations,” Dr Ong’wen said.

The Privatisation Act, 2023 repealed the Privatisation Act, 2005 and introduced several provisions whose net effect, ODM said, is to grant the Executive arm of government sweeping powers to dispose of prized assets comprising Kenya’s sovereign wealth.

The party will be asking the court to consider whether parliament complied with the duty under Article 10 and 118(1)(b) of the Constitution to ensure public participation before passing the impugned amendments.

ODM will also ask the court to determine whether the Privatisation Act, 2023 violates Article 1(1) of the Constitution of Kenya in so far as it elevates subjective economic considerations and perspectives above the principles of sovereignty, democracy and accountability.