This archive report was first published on 5 September 2019.
On September 5, 2019, the Business Daily published an article titled 'Why Kenya Airways should not have been privatised' by Peris Tobiko. However, the author of this piece disagrees with Tobiko's stance and argues that Kenya Airways should not be reverted to state ownership.
The history of state-owned enterprises in Africa has been marred by poor corporate governance, over-staffing, and continuous bailout plans. This is why most African governments have opted to privatize state-owned enterprises to build more vibrant and efficient private sector entities.
Kenya Airways was privatized in 2013 due to major financial and managerial challenges it faced. The airline's privatization was a success, and it has since become a model for other African countries. In fact, the International Civil Aviation Organisation Secretariat has hailed the privatization of government-owned airlines as one of the 'pre-eminent transformations in air transport.'
However, Tobiko argues that Kenya Airways should not have been privatized. According to Tobiko, the state is mandated to provide public goods where there is an element of non-excludability of the good and non-rival consumption. While this may be true, the fact remains that state-owned enterprises have consistently failed to deliver.
Take, for example, Ghana Airways, which was shut down in 2005 due to staggering debts. South African Airways has also faced similar challenges, despite receiving massive government bailouts. In fact, the airline remains in the red, despite the government's efforts to pump in funds.
Reverting to state ownership would be a step backward for Kenya Airways. The airline has made significant strides since its privatization, and it is now a major player in the African aviation industry. To sustain its growth, Kenya Airways needs to continue to operate independently, without the interference of the state.
Good management practices, minimal interference from political actors, enhanced efficiency, and competitiveness will aid in the overall sustainability of state-owned enterprises like Kenya Airways. Let us not make the opening of airspace to other players an issue for reverting to state ownership. With the efforts to bolster Intra-African trade, protectionism will not aid in the survival of firms.
Roba Adan is a certified investments and financial analyst and a PhD candidate.
