Hundreds of State workers face job losses in parastatal merger plan

What you need to know:

  • The impending consolidation is in line with recommendations of a 2013 report by a parastatal reforms taskforce appointed by President Uhuru Kenyatta.
  • The targeted agencies all offer financing at different levels, and the move to merge them is set create overlapping roles across all cadres of staff, pointing at likely job cuts.
  • The Business Daily could not immediately establish the total number of employees affected by the merger.

The bid to merge six State-owned financial corporations has raised fears that hundreds could lose their jobs in the re-organisation aimed at eliminating overlapping roles in the bloated institutions.

The Kenya Industrial Estates, Uwezo Fund, Youth Enterprise Development Fund, Women Enterprise Development Fund, Development Bank of Kenya and IDB Capital Limited are set to be merged into one mega bank as per an announcement made on Monday by Head of Public Service Joseph Kinyua.

The impending consolidation is in line with recommendations of a 2013 report by a parastatal reforms taskforce appointed by President Uhuru Kenyatta.

The targeted agencies all offer financing at different levels, and the move to merge them is set create overlapping roles across all cadres of staff, pointing at likely job cuts.

“All the staff serving in State agencies being merged shall be presumed to be staff of the new government owned entity,” the taskforce, which was formed to shake-up the parastatals, advised in its report.

“Any staff found not fitting in the establishment structure may be redeployed elsewhere in the public service or be off-loaded in the normal manner,” it added.

KIE, which has a staff count of 270 spread across 37 branches in the country, was conceptualised to offer financing and business development services to small scale and micro enterprises across the country.

The loss-making institution serves a similar purposes as the Uwezo Fund, Youth Enterprise Development Fund and the Women Enterprise Development Fund, with the target financee being the only differentiator.

The Business Daily could not immediately establish the total number of employees affected by the merger.

Uwezo Fund was launched in 2013 to expand access to finances and promote women, youth and persons living with disability-led enterprises at the constituency level.

This mission is similar to that held by both the Youth Enterprise Development Fund and Women Enterprise Development Fund, with the only differentiator being its target customer.

The Development Bank of Kenya as well as IDB Capital Limited, formerly Industrial Development Bank of Kenya, have a wider profit-making financing scope.

All these agencies operate several offices across the country, populated by employees whose main role is to disburse loans to different classes of customers.

The government now intends to merge them to achieve increased efficiency, resolve overlaps and make better use of State resources to achieve economies of scale.

“The merger will provide a one-stop shop for subsidised loans…attract and facilitate investments…support SMEs develop linkages with large enterprises,” Mr Kinyua said in a circular to affected agencies.

The parastatal reform taskforce was a ten-member team co-chaired by the President’s constitutional affairs adviser, Abdikadir Mohammed, and Commercial Bank of Africa CEO Isaac Awuondo.

It recommended that parastatals be trimmed from 262 to 187. A total of 42 parastatals - mostly in agricultural sector – were to be dissolved, 28 merged and 22 others will have their roles transferred to other institutions. Another 21 agencies were to be reclassified as professional bodies.

Initially, the plan was to establish the Kenya Development Bank (KDB) by merging KIE, IDB Capital, Industrial and Commercial Development Corporation (ICDC), Agricultural Finance Corporation (AFC), and Tourism Finance Corporation.

Biashara Kenya was to be formed by merging Micro and Small Enterprises Authority, Youth Enterprises Development Fund, Women Enterprise Fund, the SME Fund and the Uwezo Fund.