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Part Six : the Death of NCC

Part Six : the Death of NCC

The death of National Construction Corporation can be summed up in the words of Richard Leakey in May 1988 in Parliament during the winding up of NCC. Leakey described the collapse of the NCC as “a disease that has affected most parastatals in this country.”

The National Construction Corporation died a natural death in 1988. Well, the death was not natural, really. Launched in 1967, NCC began faced and encountered inefficiencies that saw it make massive losses between 1972 and May 1988. A state corporation that had very optimistic and focused goals was crippled by mismanagement. In the years prior to 1988, NCC had incurred losses of up to Kshs 113 million. This amount was considered bad debt – irrecoverable from the many defaulters who were contractors who had benefitted from the revolving fund.

According to the then Minister of Public Works, J.K arap Koech, this had “put NCC in a very difficult position. For it to function, we needed to appeal the Treasury to continue pouring more and more money into it. This is something which is not wise, because this is a waste of the taxpayers’ money.”

NCC was a state corporation and not a limited liability company. This meant that it was formed by an Act of Parliament in 1966 and, in May of 1988, the Kenyan Parliament met to “undo what we did in 1972.” This is an important point because, had NCC been a limited liability company, according to the Attorney General, it would have been wound up by “way of liquidation, appointment of a receiver, or appointment of a liquidator to collect to collect the assets and pay the creditors.”

The parliament had met up to “undo what [they] did in 1972” which was creating a monopoly out of NCC. According to the AG, this move to create a monopoly out of NCC had “misfired…because, perhaps, the competition was not sufficient or the protection by the parent was not adequate.” It had been anticipated that NCC would have been able to generate enough funds from its activities rather than thrive on funds allocated for other projects.

During the motion to wind up NCC, it was evident that the failure of NCC rested in its very conception. The government, it was thought, had assigned and transferred its roles to a parastatal that was unable to deliver on the goals and objectives. NCC had been “given a heavy job” and its personnel were not capable of handling the tasks, leading to operational failure.

According to Mr Kisiero, an assistant minister, it was a great pity for an “institution that had been well conceived, planned and implemented to fall by the wayside, principally because of mismanagement.” This statement was made in an era when most parastatals – such as the Kenya Commercial Bank and National Bank of Kenya – had excelled from objects of nationalization/Kenyanization to serving a collective national interest. 

Besides NCC crumbling under overwhelming responsibilities assigned to it by the government, it was clear that the NCC did not have competent people at its helm. This was manifested by the “negligence and mismanagement” right from the top of the hierarchy. In its last years, NCC was denied government tenders which were, instead, awarded to individuals. There were also many cases of conflicts of interests where some members in charge of NCC were said to be involved in the construction business despite their roles.

The other reason that saw NCC succumb to the rampant mismanagement was a much bigger problem: the local contractors. The local contractors who had benefitted from the credit facility failed to repay their loans – both to NCC and to the banks. For a revolving fund such as the fund created by NCC, newer contractors were denied the opportunity to access funds. It is partly because of this that the Minister of Public Works said that “what the ministry wants to do is to stop the heavy drainage of public funds through parastatal which is no longer able to meet its requirements.”

The extent of mismanagement was so bad that it is said that at one point in 1986, it was not clear whether the amounts given to NCC by the Treasury was “a grant, a loan or an investment.” When it was actually verified and confirmed that there were no conditions attached by the Treasury, NCC failed to set conditions to the contractors who borrowed money from its kitty. It was, technically, free money.

The collapse was so shameful that it was said that “the only thing that will remain a landmark of this corporation is their own building called Ujenzi House. It is the only thing we can see, otherwise, any other thing was a liability as opposed to an asset.”

WHAT THE COLLAPSE OF NCC MEANT

Additionally, the dissolution of NCC meant that the objectives and goals remained unattended. The younger, upcoming contractors were left out in the cold, without resources and an institution that was supposed to take care of their growth in the local construction sector.

The government strived to make the NCC’s “original ideals of indigenization” relevant by redeploying the parastatal’s staff. The staff of the collapsed institution were “redeployed through the Directorate of Personnel Management (DPM).” This affected architects, quantity surveyors and engineers.

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The objectives of NCC were transferred to the National Housing Corporation (NHC). There was an argument that it was impractical to shift the roles and responsibilities of NCC to NHC due to their incompatible roles. That is, NHC was tasked with providing shelter in a bid to enable the government fulfil its obligation to provide housing – while NCC’s role was to build the houses for the Ministry of Public Works.

What about the contractors, where did they go to? There were many ideas floated about the fate of the contractors. The first was that they were to be utilized in the District Focus for Rural Development programmes. This was still the era where there existed district development committees that would keep a register of local contractors who would carry out local projects. According to Richard Leakey, the “government wanted to find a better way in which local contractors can participate.”

With the above idea, the contractor would get a job because “he has much more credibility, he is known in the district, can be supervised easily and local people can make sure he is delivering the goods on time.” This way, Leakey argued, there would be “more freedom in the economy and more free competition.”

The liabilities of and assets of the failed parastatal were absorbed by the Ministry of Public Works.

CONCLUSION

Looking back, over the existence of the National Construction Corporation in Kenya, there were complaints that it was being underfunded. This, consequently, led to contractors not being adequately funded to carry out their projects, including the mobilization costs. The failure of this parastatal raised pertinent questions on the professionalism and ethical behaviour within the construction sector in Kenya. After its collapse, there was absolutely no legal or institution that ensured the promotion and regulation of construction in Kenya. It is during this period that many local contractors paid no attention to basic matters of workmanship.

Cover Image: Nairobi, Delamere venue by Vintage EastAfrica (Pintinterest)

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