Bye Bye Kenya Vehicle Manufacturers

We are slowly starting to see the sale of government-owned entities to private investors. This is a sign of the incompetence of the people running these entities. However, I would feel slightly better if I could invest in the entities if they got listed as public entities. This thought confirms that I might still make self-centered management decisions if I were placed in these entities. So, I will do my best to be impartial and pass fair judgment on the decision regarding the sale of Kenya Vehicle Manufacturers Limited.

Is it legal to sell a Government Owned Entity? 

Yes. You can check out the Privatization Bill 2023 to gain more understanding here.

Details of the sale 

The Competition Authority of Kenya approved the investment by CFAO Motors Kenya Ltd that would allow the company to own 98% of Kenya Vehicle Manufacturers Limited (KVM). Read more here. This investment will help KVM to settle its debts and revamp its business. Unfortunately, I have not been able to obtain KVM's financials, and I would highly appreciate it if anyone could share them with me. You could share it to my socials or send an email to martinwamb@gmail.com.

Do we expect this trend to continue? 

Privatization of government-owned entities is likely to keep occurring. My mind draws me to the 35 parastatals that were scheduled for mergers due to poor performance. I suspect the next step after merging would be privatization. This is a speculation that only Sherlock Holmes could confirm with greater accuracy. For now, all we can do is watch and wait. I researched the entities that were to be merged and truthfully, they are a liability. The biggest leech is the Kenya Forest Service, which costs Sh 4.7 billion in annual grants and still ended up with a loss of Sh 1 billion. Here is a breakdown of the parastatals in question link. 

What does this mean for you? 

I would request you to keep a close eye on announcements of mergers in the coming months. These mergers could present an opportunity for you to invest in the companies when they are ultimately privatized. If you are lucky enough to invest in one of the institutions by buying publicly traded shares, then hold on to that investment. It may yield some good returns over a long period.