EXPLAINER: What you need to know about the Prison Enterprise Fund

The National Treasury has invited Kenyans to give their views on new regulations that will operationalise the proposed Prisons Enterprise Fund, a multibillion-shilling initiative aimed at transforming the country’s prisons into self-sustaining and rehabilitative centres.

Treasury Cabinet Secretary John Mbadi proposed the dissolution of two longstanding funds: the Prison Farms Revolving Fund, established in 1993, and the Prisons Industries Revolving Fund, created in 1988.

This proposal is part of a broader initiative to modernise Kenya's correctional facilities and enhance the rehabilitation of inmates.

The dissolution of these funds is intended to streamline the management of prison industries and reinvest the proceeds into the newly proposed Prison Enterprise Fund.

In a public notice, the Treasury said the draft Public Finance Management (Prisons Enterprise Fund) Regulations, 2025, have been finalised by a multi-agency taskforce and posted on its website for public scrutiny.

The task force drew membership from the Kenya Prisons Service, State Department for Correctional Services, Probation and Aftercare Service, the Office of the Attorney General and Department of Justice, and the National Treasury itself.

The notice cites Sections 4(a) and 5(3) of the Statutory Instruments Act, 2013, which require regulation-making authorities to consult the public before issuing statutory instruments.

"Accordingly, a Multi-Agency Taskforce composed of officers drawn from the Kenya Prisons Service, the State Department for Correctional Services, the Probation and Aftercare Service, the Office of the Attorney General & Department of Justice, and the National Treasury has now finalised preparing the draft Public Finance Management (Prisons Enterprise Fund) Regulations, 2025," stated part of the notice.

Under the law, this consultation can include notifying affected organisations, inviting written submissions by a set date, or holding public hearings.

According to the Treasury, members of the public can submit comments, inputs, or memoranda on the draft regulations via post, hand delivery to the National Treasury Building in Nairobi, or email to [email protected] and [email protected].

The deadline for submissions is August 26, 2025, at 5.00 pm. The ministry has also scheduled an in-person public consultation meeting.

Mbadi has defended the proposal, saying the government wants to inject Sh4 billion in seed capital to jump-start the fund, which will be tasked with overseeing the production and sale of goods made by inmates.

The fund featured prominently in Kenya’s 2025/26 budget, as part of the broader allocation under the Governance, Justice, Law and Order (GJLO) Sector, which oversees the Kenya Prisons Service.

For the financial year, the total sector allocation stands at Sh34.7 billion, with Sh223.1 million specifically earmarked for the Prison Enterprise Fund, bringing the total allocation for prison operations to Sh34.93 billion.

The fund is designed to consolidate revenues from prison industries, including workshops, furniture production, tailoring, and prison farms, and reinvest them into inmate welfare, vocational training, and post-release support.

Under the proposed framework, the fund will consolidate revenue from prison farms, workshops, and industrial units.

These currently produce goods such as furniture, uniforms, leather items, and agricultural produce — most of which are consumed internally by the prison service.

The new model seeks to scale up production, diversify products, and tap into wider markets.

A chief executive officer from the private sector will manage the fund, supported by a board, with all proceeds reinvested in prison industries, inmate welfare, and post-release support, according to the treasury's website.

The regulations also provide for annual independent audits and require goods to be sold at fair market value.

The push comes amid government reforms to the correctional system, which faces challenges including overcrowding, limited rehabilitation success, and high maintenance costs.

Analysts warn that the prison industries are underperforming due to outdated equipment, low investment, and weak market linkages.

If implemented successfully, the fund could open new supply chains in agriculture, textiles, and manufacturing. 

The public consultation process will determine the final form of the regulations before they are submitted to Cabinet for approval.

If adopted, the fund could be operational before the end of the current financial year.