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Monday, March 17, 2008

Rush to sell Safaricom raises moral questions

Source: Business Daily
With all indications showing that a large number of small investors are likely to be locked out of the forthcoming Safaricom sale, the spotlight must turn to Finance minister Amos Kimunya over his timing of this offer that is billed as East Africa’s biggest.

Mr Kimunya has defied all counsel that his ministry should first deal with credibility issues — some of which are of criminal nature — that investors are facing in their interaction with stock brokers to launch the issue.

Last Friday, as he braved the questions hanging over the haste with which he has moved to bring Kenya’s most profitable company to the market, it became clear that the minister, despite the reconciliatory mood the country has embraced since the signing of the peace deal between President Kibaki and ODM leader Raila Odinga, remains hell bent on playing politics with the Safaricom sale.

This he has done since last year when he insisted on selling the firm in the thick of electioneering in December.

Then, he often invoked investors’ name in his pursuit of a very personal and political agenda that became only too clear.

With all the opinion polls showing the opposition ODM in the lead only a few weeks to the December 27 vote, Mr Kimunya and a faction of business politicians around him were getting uneasy over the prospect of someone else presiding over the sale.

Hence the aura of urgency he brought in the matter citing a wide range of fiscal and monetary commitments that would not be met if Safaricom was not sold. These have since come to naught many months after the December sale failed to materialise.

Mr Kimunya’s silence over these commitments while he speeds on with the sale is informed by the reality on the ground.

He can no longer tell Kenyans for certain that programmes or projects will fail to materialize this financial year if Safaricom is not immediately sold because he knows that Treasury cannot have the proceeds in its coffers any time before July when the new fiscal year begins.

Aside from the practicalities of balancing the books at Treasury, bringing Safaricom to the market at this point in time raises a number of important questions.

Ordinarily, privatizations need to pass a number of tests including transparency of processes, legal and moral authority to sell public assets as well as credibility of the sale judged by the vendor — in this case the people of Kenya — getting value from the disposal of their asset.

As things stand, the Safaricom sale cannot be said to have passed any of these tests. First, many questions have been raised over the transparency of the process, including its initiation while a new law on privatization remained frozen in the cooler for more than two years, leading to court battles last year.

Queries were also raised over the scoring of technical and financial bids in the run up to the picking of advisors for the sale and the opening of one of the bids before due date.

Then there is the moral question of the authority of what is basically a transition government under which Mr Kimunya is serving as Finance minister to undertake such an important exercise only a few days before a new government is formed.

Indications that President Kibaki may form a new government before the end of this week after Parliament passes the necessary Bills only leave the grim prospect that the minister’s action is driven by personal and sectarian interests.

The sale must go on at this time just in case the President appoints someone else under the coalition agreement to take charge at Treasury and deny him and his allies the privilege of presiding over Kenya’s biggest IPO ever. Protection of such partisan interests, in our view, should never be the drivers of decisions made by public servants.

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