The Cabinet has approved a sweeping plan to merge 42 state-owned enterprises into 20 entities, dissolve nine corporations, and divest 16 others in a bid to cut costs, enhance efficiency, and reduce the country’s fiscal burden.
The decision was made during a Cabinet meeting on Tuesday, chaired by President William Ruto at the Kakamega State Lodge, marking his first Cabinet meeting of 2025.
“In line with the commitment to streamline government operations, reduce waste, and curb excesses, the Cabinet approved a series of recommendations aimed at reforming state corporations,” a Cabinet statement said.
The reforms are a response to mounting fiscal challenges, including constrained government resources, rising demand for quality public services, and the growing public debt burden.
Many state corporations have struggled with operational inefficiencies and mounting debts, with pending bills totaling KSh94.4 billion as of 31 March, 2024.
The restructuring plan includes merging corporations with overlapping functions, dissolving entities deemed redundant, and divesting functions that can be handled by the private sector.
Six state corporations will undergo significant restructuring to better align their mandates with government priorities. Additionally, four public funds currently classified as state corporations will be declassified and integrated into relevant ministries under strengthened governance frameworks.
The National Treasury reviewed 271 state corporations, excluding those slated for privatization, to identify entities with duplicative or overlapping mandates. The Cabinet noted that these changes aim to enhance service delivery, address financial inefficiencies, and reduce reliance on the national budget.
Key mergers include the consolidation of the University Fund and the Higher Education Loans Board; the Tourism Research Institute and the Kenya Tourism Board; and the Kenya Rural Roads Authority with the Kenya Urban Roads Authority. Other entities, such as the Kenya Plant Health Inspectorate Service and the National Biosafety Authority, will be unified to eliminate redundancies.
Several corporations will be dissolved, with their functions transferred to relevant ministries or entities. For example, the Agricultural Finance Corporation will merge with the Commodities Fund, and the National Water Harvesting and Storage Authority will integrate with the National Irrigation Authority.
The Cabinet also approved the merger of public funds, including the Uwezo Fund, Women Enterprise Fund, and Youth Enterprise Development Fund, to create a single entity aimed at fostering youth and women empowerment.
These reforms are expected to significantly improve operational efficiency, reduce waste, and address the financial challenges plaguing many state corporations. By aligning government services with fiscal realities, the Cabinet aims to create a leaner and more effective public sector.
