The National Treasury building in Nairobi.
The National Treasury has directed the boards of six regional development authorities (RDAs) to put on ice all promotions, new recruitments, appointments and implementation of new projects at once.
This is to pave way for the reorganisation of the financially troubled entities under Parastatal reform programme approved by the Cabinet in January this year.
The multi-agency technical teams tasked to implement the reforms are holding meetings in Nairobi from February 12 to February 17.
The RDA operations have been a subject of State review since March last year to align it with the ncurrent Constitution that provides for devolved functions.
These entities include Coast Development Authority (CDA), Ewaso Ng’iro North Development Authority (ENNDA) and Ewaso Ng’iro South Development Authority (ENSDA).
Others are Kerio Valley Development Authority (KVDA), Lake Basin Development Authority (LBDA) and Tana and Athi Rivers Development Authority (TARDA).
“As you are aware the Cabinet approved State Corporations reforms and directed full implementation in the shortest time possible,” Treasury Principal Secretary Chris Kiptoo wrote to Harsama Kello, the Principal Secretary, State Department for ASALs &Regional Development in a letter dated February 5 2025 and copied to the chief executives of the six RDAs.
“Further, in order to ensure the intended reforms are undertaken smoothly you are required to put on hold implementation of any approved new organisation structure and new terms and conditions of service for staff for the respective corporations, suspend any new recruitment , any new appointments where interviews have been undertaken , confirmation of new appointments as well as any promotions.”
Dr Kiptoo added that implementation of new projects should not be started whether ‘the corporation has all necessary approvals and budgetary resources or not.’
The six RDAs are among 16 State-owned corporations that the government has lined up for divestiture or dissolution for being deemed non-essential or better suited for private sector management.
Others are Numerical Machining Complex, Scrap Metal Council, Kenya Fishing Industries Corporation, Jomo Kenyatta Foundation, Pyrethrum Processing Company of Kenya Ltd, Kenya National Shipping Line, Kenya Yearbook Editorial Board, Kenya National Assurance Company, School Equipment Production Unit and Kenya Post Office Savings Bank.
The Cabinet in March 2024 directed that the role of RDAs be reviewed in light of the devolution that has delegated some power and responsibilities from the national government to 47 counties following the enactment of the 2010 Constitution
With the two levels of government, the Cabinet said, ‘the review should assess the impact and effectiveness of the six regional authorities.’
The Cabinet in January this year approved reforms in state owned corporations to streamline government operations, reduce waste, and curb excesses with a view to addressing operational and financial inefficiencies, enhance service delivery, and reduce reliance on the Exchequer.
The National Treasury assessed 271 State Corporations, excluding those earmarked for privatisation and resolved merging 42 State Corporations with overlapping or related mandates into 20 entities to improve operational efficiency and eliminate redundancy.
Under the plan nine state corporations will be dissolved, with their functions transferred to relevant ministries or other State entities, while 16 corporations with outdated functions that can be provided by the private sector will be divested or dissolved.
Six State Corporations will undergo restructuring to better align their mandates and enhance performance while four public funds currently classified as State Corporations will be declassified and returned to the relevant ministries with a strengthened governance framework.
All professional organisations currently categorised as State Corporations will also be declassified and will no longer receive government budgetary allocations.
“These reforms have been necessitated by increasing fiscal pressures arising from constrained government resources, the demand for high quality public services, and the growing public debt burden,” reads a Cabinet resolution statement released after the meeting on January 21 2025.
“Many State Corporations have struggled to meet their contractual and statutory obligations, leading to an accumulation of pending bills amounting to Sh94.4 billion as of March 31, 2024.”
Amongst state corporations to be merged include University Fund & Higher Education Loans Board, Kenya Tourism Board & Tourism Research Institute, Export Processing Zones Authority & Special Economic Zones Authority, Agricultural Finance Corporation & Commodities Fund, Tourism Promotion Fund & Tourism Fund and the Kenya Rural Roads Authority (KeRRA) set to be merged with the Kenya Urban Roads Authority (KURA).
On the other hand nine (9) State Corporations including the Kenya Film Classification Board, LAPSSET Corridor Development Authority, Kenya Fish Marketing Authority, Centre for Mathematics, Science and Technology Education in Africa will be dissolved and their functions transferred back to the parent Ministry.
In October 2013 the Presidential Task Force on Parastatal reforms recommended the dissolution and merger of 75 state corporations reducing their number to 187 from 262.
Former President Uhuru Kenyatta directed that the Task Force’s recommendations be implemented in three months since only 51 state corporations were self-sustaining and did not rely on budgetary support
However the programme hit a dead end, with sources hinting at lack of political will to carry out the sale process.
In 2022 the International Monetary Fund (IMF) recommended drastic reforms at Kenya’s financially-troubled state-owned enterprises including Kenya Power and Kenya Airways.
