Public enterprises and the new constitution: towards a better system for corporate governance
Mogaka, Danstan O
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State Owned Enterprises (SO E) in Kenya have been poorly managed since independence owing to three factors, the appointment of Board of Directors on political and ethnic basis, poor monetary disclosure and oversight bodies that are lacking in independence and autonomy and often burdened with conflicting roles. Apart from the SOE listed on the Nairobi Stock Exchange (NSE), that have adopted good corporate governance guidelines provided by the Capital Markets Authority (CMA), a majority of SOE did not consider good corporate governance as a prerequisite to good corporate performance. Other than poor corporate governance, an outdated and often bad legal framework (Companies Act and State Corporations Act) were found to provide loopholes through which the BOD was appointed on grounds that did not meet the grounds of meritocracy. The question of privatization will be interrogated at length and in depth as a solution to poor corporate governance in Public Enterprises. However the promulgation of the Constitution of Kenya 2010, in spite of the many challenges in its implementation has codified corporate governance principles and provided enormous opportunities to correct the mismanagement of SOE.