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New president faces hurdles in replacing parastatal CEOs – Business Daily

Top presidential contenders in Tuesday’s election Raila Odinga (L) and William Ruto. FILE PHOTO | NMG
The winner of Kenya’s presidential election faces a legal hitch in replacing chief executives of top State-owned firms with a majority of their contracts running up to 2024.
Ministers tapped by the incoming head of State will either have to wait longer to replace the CEOs or tear up their contracts in a move that could prompt lawsuits.
Traditionally, a change in administration often triggers shake-ups in parastatals as the president and ministers move to assert their influence over government-managed firms that have previously been used as centres of patronage by previous regimes.
Besides the contract hitch, the outgoing administration has in recent weeks increased the pace of appointments to parastatal boards, with dozens of State corporations tapping nearly 200 directors in weeks.
This has narrowed the number of positions at the immediate disposal of the new president and ministers for rewarding loyalists.
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Deputy President William Ruto and opposition leaders are running neck and neck amid slow verification of votes of Tuesday’s election.
CEOs of cash rich-parastatals such as the Kenya Revenue Authority (KRA), Kenya Airports Authority (KAA), Communications Authority of Kenya (CA), Energy and Petroleum Regulatory Authority (EPRA) and Kenya National Highways Authority (KeNHA have contracts running into 2024.
Terms of chief executives of Rural Electrification Authority (REA), Geothermal Development Corporation, Kenya Railways Corporation, National Health Insurance Fund (NHIF), Kenya Pipeline Corporation and KenGen will expire next year.
The tenure of Central Bank Governor Patrick Njoroge will also come to an end in June next year.
Dr Njoroge was first appointed to his post in June 2015 for a four-year term, which is renewable once. It was renewed in June 2019.
The law says that CEOs can only be removed from office due to absenteeism, jailed for a term exceeding six months and prolonged sickness or mental illness.
Top executives can also resign in a rule that ministers have exploited before to force out CEOs of State-owned firms. The fallouts have triggered lawsuits that have seen some chief executives get back their jobs and others receive compensation for unfair dismissal.
In 2018, the High Court ordered Kenya Reinsurance to reinstate their managing director Jadiah Mwarania, terming his sacking unlawful.
Mr Mwarania moved to court alleging unfair termination after the board of the State firm reckoned he lost his job over non-performance. He is still the CEO of Kenya Re. A judge recently ordered Kerio Valley Development Authority (KVDA) to pay its former boss David Kimosop Sh23.4 million for unfair termination.
The top jobs at Kenya Power, Kenya Ports Authority (KPA) and Kenya Electricity Transmission Company will be low-hanging fruits for new ministers.
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Currently, State-owned firms do not have substantive CEOs and the positions look set to attract jostling by political and business operatives for their preferred candidates.
In 2003, late President Mwai Kibaki made radical changes in the board and C-suites of State-owned firms after ending Moi’s 24-year rule.
The Moi era had been characteirised by intimidation of opponents, the hollowing out of institutions meant to keep the government in check and rampant corruption.
President Uhuru Kenyatta also made changes in the leadership of the parastatals after romping to power in 2013.
Ethnic composition of appointments under the new administration will come under scrutiny.
An earlier report showed that Kikuyu and Kalenjin communities dominated top jobs in government, embassies and chief executive positions in parastatals.
The Public Service Commission (PSC) said in the report that Kikuyus and Kalenjins account for 29 percent and 11 percent of the 417 top jobs in government, including directors and principal secretaries respectively.
Kikuyus accounted for 27 percent of Kenya’s 66 envoys with Kalenjins taking 14 percent amid a push to ensure that offices funded by taxpayers have a face of Kenya with all communities given a chance to serve.
On CEOs of parastatals, Kikuyus took 20 percent of the positions followed by Kalenjins at 19.4 percent, Luo (14.4 percent) and Luhya (10 percent).
The Constitution introduced the ethnic representation requirements to check a historical trend where tribesmen of those in power were favoured during recruitment.
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Ethnic groups whose job representation surpasses their corresponding national population proportion are considered to be over-represented.
The Kikuyu and Kalenjin dominance mirrors the two tribes’ presence at the highest office in Kenya since Independence.
President Kenyatta succeeded Mr Kibaki, both Kikuyus. President Daniel arap Moi who ruled for 24 years before Mr Kibaki was a Kalenjin. Deputy President Ruto is also a Kalenjin.
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Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.