Photo/courtesy.
The government has made a significant policy U-turn by opting to lease Mt Elgon Lodge a state-owned facility instead of selling it, signaling a broader rethink of its privatization agenda.
This move diverges from the administration’s earlier aggressive strategy to privatize dozens of state-owned enterprises in a bid to ease fiscal pressure.
In January, the Cabinet approved a plan to merge 42 state corporations into 20 entities and dissolve nine others, a move aimed at enhancing efficiency and reducing the burden on the national budget.
The privatization drive was officially launched with the signing of the Privatization Act, 2023, by President William Ruto in October last year. The law allowed the National Treasury to sell public enterprises without needing parliamentary approval, streamlining the process and minimizing delays. The strategy primarily targeted non-strategic and loss-making institutions to raise funds and improve public service delivery.
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However, the plan hit a legal roadblock in September 2023 when the High Court declared the Privatization Act unconstitutional. Justice Chacha Mwita ruled that the law was passed without sufficient public participation, failing to meet constitutional thresholds.
“The National Assembly failed to discharge its obligations to conduct public participation that met both quantitative and qualitative thresholds,” Justice Mwita stated in his ruling. He also nullified the planned privatization of the Kenyatta International Convention Centre (KICC), citing violations of the Monument and Heritage Act.
The shelving of Mt Elgon Lodge’s sale reflects the government’s broader reassessment of its privatization policy amid legal setbacks and growing public scrutiny. By choosing leasing over outright sale, the state retains ownership while inviting private sector efficiency, striking a balance between public interest and fiscal sustainability.
