Cabinet approves Major Reforms: 42 State Corporations to merge into 20 agencies

In a bold move to enhance efficiency and reduce public resource wastage, the Cabinet has approved sweeping reforms that will consolidate 42 State corporations with overlapping functions into just 20 agencies. This decision followed a Cabinet meeting chaired by President William Ruto at the Kakamega State Lodge on Tuesday.

The reforms aim to address escalating fiscal pressures resulting from limited government resources, a growing demand for high-quality public services, and an increasing public debt burden. A Cabinet despatch highlighted the necessity for these changes, which are designed to ensure better use of public funds.

The National Treasury conducted a comprehensive assessment of 271 State corporations, excluding those earmarked for privatization, and identified significant inefficiencies and redundancies. According to the report, many corporations have been unable to meet their statutory obligations, leading to pending bills totaling Ksh. 94.4 billion as of March 31, 2024.

Key Mergers to Reduce Overlaps

Among the 42 State corporations slated for mergers, the University Fund is set to merge with the Higher Education Loans Board, while the Kenya Rural Roads Authority will be consolidated with the Kenya Urban Roads Authority. Here’s the full list of proposed mergers:

1. University Fund & Higher Education Loans Board
2. Kenya Tourism Board & Tourism Research Institute
3. Export Processing Zones Authority & Special Economic Zones Authority
4. Anti-Counterfeit Authority, Kenya Industrial Property Institute & Kenya Copyright Board
5. Kenya Industrial Research and Development Institute & Kenya Industrial Estates
6. Agricultural Finance Corporation & Commodities Fund
7. Kenya Forest Service & Kenya Water Towers Agency
8. Agricultural Development Corporation & Kenya Animal Genetic Resource Centre
9. National Irrigation Authority & National Water Harvesting and Storage Authority
10. Kenya Law Reform Commission & National Council for Law Reporting
11. Tourism Promotion Fund & Tourism Fund
12. Commission for University Education, Technical and Vocational Education and Training Authority & Kenya National Qualifications Authority
13. Kenya Rural Roads Authority & Kenya Urban Roads Authority
14. Kenya Investment Authority & Kenya Export Promotion and Branding Agency
15. Water Services Regulatory Board, Water Regulatory Authority & Regional Center on Ground Water Resources, Education, Training and Research
16. Kenya National Trading Corporation & National Cereals & Produce Board
17. Uwezo Fund, Women Enterprise Fund & Youth Enterprise Development Fund
18. Kenya Medical Research Institute & Kenya Institute of Primate Research
19. Kenya Plant Health Inspectorate Service & National Bio-Safety Authority
20. Agriculture and Food Authority

Dissolution of Non-Essential Corporations

Nine State corporations will be dissolved, with their functions transferred back to their parent ministries. These include the Kenya Film Classification Board, LAPSSET Corridor Development Authority, and the Kenya Fish Marketing Authority, among others.

Divestiture of Non-Essential Entities

Additionally, 16 corporations deemed non-essential or more suitable for private sector management will be divested or dissolved. This list includes:

1. Numerical Machining Complex
2. Scrap Metal Council
3. Kenya Fishing Industries Corporation
4. Jomo Kenyatta Foundation
5. Pyrethrum Processing Company of Kenya Ltd
6. Kenya National Shipping Line
7. School Equipment Production Unit
8. Kenya Yearbook Editorial Board
9. Kenya National Assurance Company
10. Coast Development Authority
11. Ewaso Ng’iro South Development Authority
12. Ewaso Ng’iro North Development Authority
13. Kerio Valley Development Authority
14. Lake Basin Development Authority
15. Tana and Athi Rivers Development Authority
16. Kenya Post Office Savings Bank

Restructuring for Enhanced Performance

Six key corporations, including Kenya Utalii College and the Postal Corporation of Kenya, will undergo restructuring to better align with their mandates and improve performance.

Declassification of Public Funds and Professional Bodies

Public funds such as the Sports, Arts, and Social Development Fund will be declassified and placed under their respective ministries with improved governance structures. Similarly, professional organizations, including the Nursing Council of Kenya and the Engineers Board of Kenya, will no longer receive government budget allocations.

This comprehensive reform package marks a significant shift in the government’s approach to managing state resources, with an emphasis on efficiency, accountability, and enhanced service delivery.