Treasury CS Njuguna Ndung’u says only 158 parastatals will be retained in reforms

More than 130 state-owned companies will be dismantled or merged in a planned restructuring that is expected to result in massive job losses.

The National Treasury has indicated that only 158 of the 288 parastatals that have been evaluated to determine their viability will be maintained.

Treasury Cabinet Secretary Njuguna Ndung’u said 41 state corporations have been proposed for mergers, some with duplicate or overlapping mandates. Another 25 companies have been proposed for liquidation and transfer to relevant ministries or companies.

“In line with the government’s efforts for fiscal consolidation, the National Treasury has carried out a preliminary assessment of 288 state corporations to determine their viability or recommend necessary actions,” Professor Ndungu said in a summary report on the budget estimates for 2024/25 presented in Parliament on Tuesday.

“From the preliminary evaluation, 158 state companies that are strategic will be maintained. The restructuring of 40 state corporations and two government-linked corporations is proposed,” he added.

Professor Ndung’u said the mandates or functions of seven corporations require political guidance, while 25 entities are earmarked for privatization.

Professor Ndungu said the assessment was still a work in progress as it aimed to identify duplications and overlaps in the mandate, especially the statutes establishing the various entities, and recommend an appropriate way forward.

The assessment also aims to identify state corporations with outdated mandates or where, in the provision of goods and services, the private sector is well established in that sector.

The CS said that the study also seeks to identify fiscal risks for the treasury and the possibility of containing fiscal spending.

The revelations followed a House resolution under the recommendations of the Budget and Appropriations Committee that requires the Treasury to accelerate its review of all semiautonomous government agencies through its newly created high-level risk committee and report to the National Assembly before June 30.

“The assessment will provide a basis for policy direction such as retention of strategic state corporations, mergers, dissolution, transfer of functions to line ministries or other state corporations, restructuring and privatization,” Professor Ndung’u said.

“Going forward, stakeholder participation in the reforms will be carried out in the month of May 2024, after which the report and recommendations will be presented to the Cabinet for approval and subsequently to the National Assembly before 30 June 2024,” he added.

Professor Ndungu said the implementation of privatization that is not affected by the judicial stay is ongoing and that the Treasury is monitoring the court cases and will present a detailed report on the status to the National Assembly at the end of June.

He said the reforms will also affect government-linked corporations, companies in which the government’s stake is less than 50 percent.

In March, Treasury Principal Secretary Chris Kiptoo told Parliament that an assessment of the viability of all state corporations was underway.

Dr Kiptoo told the Budget and Appropriations Committee that Treasury is carrying out a detailed financial assessment of 50 state-owned corporations to quantify the financial risks emanating from them.

Professor Njuguna’s update on the proposed merger or dissolution of state entities comes just two weeks after the conclusion of the 2024 National Wage Conference, whose series of resolutions could shake up Kenya’s public service.