RATIONALIZATION

Major state agencies merger looms as Ruto takes another shot

Upto 130 entities to be affected in the IMF backed move.

In Summary

•According to Treasury, only 158 are viable and remain self-reliant, as the rest continue to depend on bail-outs.

•At least 41 have so far been proposed for mergers to curb duplication while 25 will be wounded up.

National Treasury Cabinet Secretary Njuguna Ndung'u
National Treasury Cabinet Secretary Njuguna Ndung'u
Image: FILE

President William Ruto’s administration is taking another shot at merging state agencies to cut wastage, in what could see up to 130 enterprises affected in the IMF-backed move.

The restructuring will see a number of them dissolved with those with duplicating roles merged, in a move that puts hundreds of jobs on the line.

National Treasury has also begun privitasation of government-owned enterprises whose mandates “are no longer relevant”.

During the budget reading last Thursday, Treasury CS Njuguna Ndung’u said those that require huge budgetary allocations for bail outs, and those producing goods and services that would more efficiently be produced by the private sector will be restructured.

A number will also be transferred back to parent ministries or relevant state corporations to, Ndung’u said, to remove duplication of functions, enhance efficiencies and synergies in operations to optimise the use of limited resources and ensure state corporations are self-sustaining.

It will also ensure they generate additional revenue for the exchequer and quality service delivery to Kenyans, he said.

“The government is committed to implementing policy changes to ensure government-owned enterprises realize their full potential,” the CS said.

In 2023, the Cabinet approved the Ownership Policy for Government-Owned Enterprises, a key governance reforms framework.

To anchor the policy in law and give effect to its operationalisation, a draft Government Owned Enterprises Bill, 2024 has been finalised and is undergoing public participation.

Once the process is completed and approval is granted by Cabinet, the Bill will be submitted to Parliament for consideration.

Treasury has also prepared a draft Government Investment Regulations, 2024 to provide a framework for the efficient and effective management of government investments.

The draft Regulations will be taken through public participation before submission to the August house for consideration.

Parastatal reforms, albeit in slow motion mainly due to political interference, began in 2015 when a Presidential Task Force on Parastatals Reforms presented its report to former President Uhuru Kenyatta, highlighting major major reforms on state corporations, including rationalisation to remove overlaps, duplication and redundancies.

The task force which was at the time led by the former President's constitutional affairs adviser, Abdikadir Mohammed, had recommended the trimming of the number of state agencies from 262 to 187.

According to the Treasury, only 158 are viable and remain self-reliant, as the rest continue to depend on bail-outs.

At least 41 have so far been proposed for mergers to curb duplication while 25 will be wounded up.

Some of the ministries with a high number of state agencies include agriculture, transport, tourism, energy, industrialization, trade and enterprise development, and sports, culture and heritage, which could face a major rationalisation.

A huge number of these entities have remained in losses or yield low dividends for the government, forcing the exchequer to bail them out.

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