Govt to Merge 40 State Corporations and Shut Down 9 Others

On January 21, 2025, President William Ruto chaired the first Cabinet meeting of the year at State Lodge, Kakamega. The President urged his Cabinet to leverage the diverse political composition of the government to bring about transformative changes in Kenya. He emphasized the importance of unity and inclusivity, encouraging leaders to seize this historic opportunity to advance national development.

Transformative Achievements and Reforms

During the meeting, President Ruto outlined the progress made under the Bottom-Up Economic Transformation Agenda, highlighting initiatives such as:

• Increased contributions to the National Social Security Fund (NSSF).
• Advancements in universal health coverage.
• Development of affordable housing projects.
• Establishment of special economic zones and County Aggregation and Industrial Parks.

Additionally, the agricultural sector has seen record-breaking maize and sugar production, with 832,000 tonnes produced last year—the highest since independence. The President also noted improvements in tea and coffee production, dairy farming, last-mile electricity connectivity, and fiber optic network expansion.

State Corporation Reforms

In a bid to streamline government operations, reduce redundancy, and enhance efficiency, the Cabinet approved major reforms to State Corporations. These include:

1. Mergers:
   Forty-two (42) State Corporations with overlapping mandates will be merged into 20 entities to improve efficiency. Examples include:
   • University Fund and Higher Education Loans Board.
   • Kenya Tourism Board and Tourism Research Institute.
   • Kenya Forest Service and Kenya Water Towers Agency.
2. Dissolutions:
   Nine (9) corporations, including the Kenya Nuclear Power and Energy Agency and the Kenya Film Classification Board, will be dissolved. Their functions will be reassigned to relevant ministries or entities.
3. Privatization:
   Sixteen (16) outdated corporations will either be privatized or dissolved. These include:
   • Kenya Fishing Industries Corporation.
   • Pyrethrum Processing Company of Kenya Ltd.
4. Restructuring:
   Six (6) corporations, such as Kenya Utalii College and the National Housing Corporation, will have their mandates realigned to improve performance.
5. Declassification:
   Certain public funds and professional bodies currently categorized as State Corporations will be declassified and returned to their respective ministries. These include the Water Sector Trust Fund and the Nursing Council of Kenya.

Fiscal Responsibility

The reforms are aimed at addressing the financial strain caused by inefficient operations and a growing public debt. As of March 31, 2024, pending bills among State Corporations had accumulated to KSh94.4 billion.

Modernizing Governance and Policy

The Cabinet also approved several forward-looking policies:

• Kenya Cloud Policy: This aims to enhance digital service delivery, improve cybersecurity, and promote private-sector investment in cloud infrastructure.
• Dual Training Policy: Aimed at addressing skills mismatches in the labor market, this policy integrates classroom learning with hands-on industry training.
• Enhanced Electronic Travel Authorization (eTA): Improvements to the eTA system include expedited processing times and exemptions for travelers from most African countries to promote regional integration.

Additional Approvals

The Cabinet approved other initiatives, including:

• Thika and Githunguri Water Supply and Sanitation Improvement Project.
• Kenya’s Ratification of the Inter-African Coffee Organisation New Treaty.
• Plant Protection Bill 2023 to bolster agricultural productivity.
• Restructuring strategies for Rift Valley Textiles (Rivatex) to attract strategic partners.

Conclusion

These sweeping reforms and initiatives mark a significant step forward in Kenya’s journey toward economic transformation and national unity. By addressing inefficiencies and fostering collaboration, the government aims to create a stronger foundation for growth, innovation, and improved livelihoods for all Kenyans.

For detailed legal guidance on how these reforms may impact you, contact WKA Advocates at Valley View Business Park, Nairobi.