This archive report was first published on 17 July 2020.
On July 17, 2020, five independent directors of the state-controlled utility, Kenya Power, abruptly exited the board, sparking speculation about the reasons behind their departure.
According to pundits, the exit was not surprising, given the history of boards of strategic parastatals being filled by cronies of powerful politicians whose tenures can change abruptly depending on their political fortunes.
Former Nandi County representative Zipporah Kering, one of the directors who resigned, described her exit as a 'political witch hunt' in a tweet, saying 'We shall overcome.'
The resignations were seen as reflecting rising factionalism and political tensions between two main ethnic coalitions that provided the bulk of support to the Jubilee administration.
Of the five directors who exited, Adil Khawaja, Wilson Mugung'ei, Kairo, Brenda Kokoi, Zippora Kering, and Mehboob Mohammed had been on the board since December 2014, 2016, and 2017, respectively.
Interestingly, Khawaja also exited the board of the Kenya Commercial Bank, where he had been an influential player, having served as the chairman of the bank's biggest subsidiary and Kenyan operation.
The appointment of directors of parastatals on the basis of cronyism is at the heart of the corporate governance crisis in the parastatal sector in Kenya.
As the board quits, Kenya Power is left with a massive debt, with debts exceeding 35% of pre-tax earnings and interest payments surpassing annual earnings.
The debt-driven expansion programme has helped the company sustain appearances of prosperity, but the impact of onerous debt obligations is clear: dwindling cash flows, escalating plant break downs, and bouts of crippling blacks.
I propose a solution for the majority shareholder, the government: a financial bail-out of the company, removal of state-linked loans from the balance sheet, and the appointment of an independent third party to run Kenya Power under a management contract.
