Read the following and answer the questions that follow:

Various commissions and Kenya's Controller and Auditor General consistently point to the inefficiency and mismanagement of parastatals (state-owned enterprises). Consequently, their advice has been to divest and privatise.

The main reason advanced by the Kenyan government for embracing privatisation were to reduce the fiscal burden, develop the private sector, broaden ownership of wealth and raise revenue for the cash-strapped government. As these goals are mutually exclusive, achieving them, especially in adeveloping country like Kenya, is problematic. This has made privatisation a rather unpopularprocess in the country.

Scholars concluded that Kenya's privatisation was successful as its objectives were conducted

systematically and transparently and that the public supported the government initiatives which wasdone in an atmosphere of free of suspicion.

(Kenya Airways: A case study of privatisation: Samuel Oyieke:2002)

1.1 From a financial perspective provide an opinion on the government of Kenya's bold step to

privatise its state-owned enterprise. (10)

1.2 Provide a discussion on the views of proponents of privatisation and assess the relevance

and correctness of their arguments. (15)