Business Model Paradigm Not Bailouts: Sustainability of Parastatals in Kenya

Splashing money at struggling Parastatals and other state owned Enterprises is not enough to solve the deep rooted problems these organizations face.

Since the independence of most African states, most Parastatals have been facing fiscal challenges because of because of their inefficiency, losses, budgetary burdens, and provision of poor products and services. In some instances they achieve some non-commercial objectives, which are used to justify their poor economic performance.

In Africa it’s always safe to be politically correct than to go the full hog and solve the root cause of the failure of a government entity, department or parastatal.  Many at times the response to uncertainty is a knee jerk reaction to fix the problem, fire the scapegoat; anything but sit with the problem and see what novel solutions emerge.

Take Kenya Airways, Mumias Sugar and many more they have had their fair share of challenges just like any other organizations but on each occasion, the response to this has come in the form of a financial bail-out or loan.

Although experts agree that Kenya’s state owned enterprises need such financial bail-outs in the short-term – they are not ever going to be part of the long-term solution.

Sate owned enterprise need to develop sound business plans, strong internal governance and greater efficiencies.

Leaders in struggling Parastatals, State owned agencies and any other organization need to understand is that no expensive policy, consultant or big bailout can replace the power of paradigm shift  in attitude from problem-solving to solution-finding.

One of the most effective ways of helping a business in crisis is through a process of business model innovation; a tried-and-tested mechanism which integrates these techniques to obtain optimal results.

Business Model Innovation looks at the various components which make up a business and reinvents these to deliver value in a new way. It is a practical and powerful mechanism for establishing a culture of change in a company. By combining theory and practical application, individuals in the organisation are guided towards coming up with new solutions for their unique business environment.

Too many companies are not set up for innovation and growth and find themselves unable to get out of a rut. When the problems are manifold and complex this may make finding a solution tough but it doesn’t mean the solutions aren’t out there.