More than 130 state-owned enterprises are set to be scrapped or merged in a planned restructuring that is expected to result in massive job losses.
The National Treasury has indicated that only 158 of the 288 parastatals that have undergone assessment to ascertain their viability will be retained.
Treasury Cabinet Secretary Njuguna Ndung’u said 41 State corporations, some with duplicating or overlapping mandates have been proposed for mergers. A further 25 corporations have been proposed for winding up and transfer back to the ministries or relevant corporations.
“In line with the government efforts for fiscal consolidation, the National Treasury has undertaken a preliminary assessment of 288 State corporations to determine their viability and or recommend necessary action,” Prof Ndungu said in a summary report on the 2024/25 Budget Estimates tabled in Parliament on Tuesday.
“From the preliminary assessment, 158 State corporations which are strategic will be retained. 40 State corporations and two government-linked corporation are proposed for restructuring,” he added.
Prof Ndung’u said seven corporations’ mandates or functions require policy guidance, while 25 entities are earmarked for privatisation.
Prof Ndungu said the assessment is still a work in progress as it was to identify duplications and overlaps in mandate, especially the statutes establishing the various entities, and recommend an appropriate way forward.
The assessment is also meant to identify State corporations with outdated mandates or where, in the supply of goods and services, the private sector is well established in that sector.
The CS said the study further seeks to identify fiscal risks to the exchequer and the possibility of fiscal expenditure containment.
The disclosures were made following a House resolution under the recommendations of the Budget and Appropriations Committee requiring Treasury to expedite its review of all semi-autonomous government agencies through its newly established high-level risk committee and report to the National Assembly by June 30.
“The assessment will provide a basis for policy direction such as strategic State corporations to retain, mergers, dissolution, transfer of functions back to sector ministries and or other State corporations, restructuring and privatisation,” Prof Ndung’u said.
“Going forward, stakeholder engagement on the reforms will be undertaken in the month of May 2024, following which the report and recommendations will be submitted to Cabinet for approval and subsequently submitted to the National Assembly by June 30, 2024,” he added.
Prof Ndungu said implementation of privatisaton not affected by court suspension is ongoing and that Treasury is monitoring the court cases, and will submit a detailed status report on to the National Assembly by the end of June.
He said the reforms will also affect government-linked corporations—companies in which the government shareholding is less than 50 per cent.
In March, Treasury Principal Secretary Chris Kiptoo told Parliament that a viability assessment of all State corporations was being undertaken.
Dr Kiptoo told the Budget and Appropriations Committee that Treasury is carrying out a detailed financial evaluation of 50 State corporations in order to quantify the financial risks emanating from them
Prof Njuguna’s update on the proposed merger or dissolution of State entities comes barely two weeks after the conclusion of the 2024 National Wage Bill Conference whose raft of resolutions could shake Kenya’s public service.
