Following the Cabinet meeting held at the Kakamega State Lodge under the leadership of President William Ruto, the government has revealed a raft of decisions that will see over 40 state corporations merged into almost half the number.
The Cabinet approved the merger of 42 state corporations into 20 parastatals, citing the move as a measure to enhance operational efficiency and eliminate redundancy.
The decision came following an assessment done by the Ministry of Treasury on 271 State Corporations under the stewardship of Cabinet Secretary John Mbadi. However, those that had been earlier earmarked for privatisation will not be affected by the merger decision.
The University Fund and the Higher Education Loans Board (HELB) are set to merge into a single entity. Similarly, the Kenya Tourism Board and the Tourism Research Institute will also be consolidated.
President William Ruto hands over Khs.511 million to Treasury CS John Mbadi. PHOTO/ Courtesy.
Additionally, the Anti-Counterfeit Authority, Kenya Industrial Property Institute, and Kenya Copyright Board will be merged into one state parastatal. The Kenya Forest Service and Kenya Water Towers Agency will likewise be combined into a single entity.
As a result, nine state corporations will be dissolved, with their functions reassigned to relevant ministries or other state entities. Additionally, 16 corporations with outdated mandates that can be efficiently handled by the private sector will either be divested or dissolved.
Among the nine entities set for dissolution are the President’s Award, Kenya Nuclear Power and Energy Agency, Kenya National Commission for UNESCO, and the Kenya Film Classification Board.
The government also announced that six state corporations will undergo restructuring to better align their mandates and enhance performance. These include the Kenya Roads Board, National Housing Corporation, Postal Corporation of Kenya, and Kenya Utalii College.
Additionally, four public funds currently classified as state corporations will be declassified and transferred back to their respective ministries under a strengthened governance framework.
The Cabinet further resolved that all professional organizations currently categorized as state corporations will also be declassified and will no longer receive government budgetary allocations.
According to the Cabinet, these decisions regarding mergers, restructuring, and operational adjustments were driven by fiscal pressures stemming from constrained government resources.
Additionally, many of the parastatals were found to have been struggling to meet their contractual and statutory obligations. This the Cabinet said had resulted in the accumulation of pending bills.
”These reforms have been necessitated by increasing fiscal pressures arising from constrained government resources, the demand for high-quality public services, and the growing public debt burden,” the dispatch read in part.
”Many State Corporations have struggled to meet their contractual and statutory obligations, leading to an accumulation of pending bills amounting to KSh94.4 billion as of March 31, 2024.”