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20 CEOs could lose their jobs in new proposal by State House, Treasury teams

President William Ruto met officials from Treasury, Central Bank of Kenya & the President's Council of Economic Advisors.

President William Ruto meeting officials from Treasury and Central Bank and President's Council of Economic Advisors State House Nairobi.

The National Treasury and President William Ruto's Council of Economic Advisors are proposing a restructuring plan that could result in at least 20 chief executives losing their positions.

  • The National Treasury and President William Ruto's Council of Economic Advisors are proposing a restructuring plan for State corporations
  • The plan could result in at least 20 chief executives losing their positions
  • President Ruto has issued warnings and directives to parastatal chief executives to reduce recurrent budgets and contribute profits or surplus funds to the National Treasury

This sweeping reforms, driven by conditions set by the International Monetary Fund (IMF), aims to streamline operations and reduce financial wastage within State corporations.

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According to a report by the Business Daily, the restructuring plan targets 35 parastatals, focusing on merging entities with overlapping functions, closing down struggling ones, and transferring their roles to more efficient agencies.

The key recommendations include:

Postal Corporation of Kenya (PCK) and Kenya National Shipping Line (KNSL):

Mandate: PCK manages postal services and financial services via post offices, while KNSL oversees maritime shipping operations.

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Change: KNSL's functions will be absorbed by PCK, with the aim of improving cargo shipment, clearing, forwarding, and last-mile delivery by partnering with strategic investors.

Kenya National Qualifications Authority (KNQA) and Commission for University Education (CUE):

Mandate: KNQA regulates qualifications to ensure standards and quality, while CUE accredits universities and maintains standards for higher education.

Change: KNQA and CUE will merge to form a new regulatory body focusing on quality education and qualifications.

Kenya Export Processing Zones Authority (EPZA) and Special Economic Zones Authority (SEZA):

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Mandate: EPZA promotes export-oriented industrial activities, while SEZA manages and promotes special economic zones.

Change: EPZA will merge with SEZA to create a unified body that fosters industrial growth through processing and special zones.

Kenya Academy of Sports (KAS) and Sports Kenya:

Mandate: KAS focuses on sports development and talent nurturing, while Sports Kenya manages sports facilities and promotes sports.

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Change: KAS will merge with Sports Kenya to form a single entity dedicated to the development and promotion of sports.

Kenya National Innovation Agency (KENIA) and National Commission for Science, Technology, and Innovation (NACOSTI):

Mandate: KENIA promotes innovation, while NACOSTI regulates and promotes research and development in science and technology.

Change: KENIA and NACOSTI will merge to enhance research and innovation through a well-resourced fund.

Uwezo Fund, Youth Enterprise Development Fund (YEDF), and Women Enterprise Fund (WEF):

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Mandate: Uwezo Fund, Youth Enterprise Development Fund, and Women Enterprise Fund provide financial support to youth, women, and marginalized groups to promote entrepreneurship.

Change: The three funds will merge to create a well-resourced entity aimed at supporting MSME groups, youth, and PWDs.

Kenya Industrial Property Institute (KIPI) and Kenya Copyrights Board (KECOBO):

Mandate: KIPI handles industrial property rights, while KECOBO manages copyrights and intellectual property.

Change: KIPI will merge with KECOBO to form a single entity that strengthens patent and industrial property protection.

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Kenya Export Promotion and Branding Agency (KEPROBA), Kenya Investment Authority (KenInvest), and Kenya Tourism Board (KTB):

Mandate: KEPROBA promotes Kenyan products abroad, KenInvest attracts and facilitates investment, and KTB markets Kenya as a tourist destination.

Change: These agencies will merge to enhance promotion, marketing, and investment in Kenya.

Agricultural Finance Corporation (AFC) and Commodities Fund:

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Mandate: AFC provides credit for agricultural development, while the Commodities Fund supports farmers' financial needs.

Change: AFC will merge with the Commodities Fund to better support food production and security.

Kenya Law Reform Commission (KLRC) and National Council for Law Reporting (NCLR):

Mandate: KLRC advises on law reform, while NCLR publishes laws and legal information.

Change: KLRC will merge with NCLR to enhance coordination in law reform and publication.

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National Cancer Institute (NCI) and National Syndemic Diseases Control Council (NSDCC):

Mandate: NCI focuses on cancer control and management, while NSDCC addresses syndemic diseases.

Change: NCI will merge with NSDCC to improve coordination in managing cancer and syndemic diseases.

National Drought Management Authority (NDMA) and Regional Center on Ground Water Resources (RCGWR):

Mandate: NDMA manages drought response, while RCGWR focuses on groundwater research and management.

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Change: NDMA will merge with RCGWR to strengthen water resource management and drought response.

National Honors Council and President’s Award-Kenya:

Mandate: The National Honors Council oversees state awards, while the President’s Award-Kenya promotes youth development through awards.

Change: The two entities will merge to streamline the identification and awarding process for distinguished individuals.

Bomas of Kenya and Kenya Cultural Centre:

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Mandate: Bomas of Kenya showcases Kenya’s cultural heritage, while Kenya Cultural Centre promotes the arts.

Change: The two institutions will merge to enhance the promotion of Kenya’s heritage and cultural diversity.

In March, President William Ruto issued a stern warning to loss-making parastatals, emphasising the need for stringent financial management and threatening to shut down those that fail to turn around their fortunes.

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This warning comes as part of a broader effort to reform the management of state corporations, focusing on reducing wastage, enhancing efficiency, and ensuring a more sustainable use of public resources.

At the heart of President Ruto's warning is the recognition that many parastatals have become a drain on the Exchequer, with some making losses for years without any clear plans for improvement.

The president made it clear that the government will engage in an elaborate consolidation process aimed at stopping duplicity of functions and eliminating excess capacity.

This process is expected to result in significant job losses, with CEOs, board chairpersons and members, as well as excess staff in the targeted agencies, being the first to be affected.

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The scope of the reforms is substantial, with up to 140 parastatals facing the prospect of being merged or wound up.

In addition to the threat of closure, President Ruto has also directed parastatal chief executives to reduce their recurrent budgets by 30% and ordered commercial corporations to remit 80% of their profits after tax to the National Treasury.

Regulatory institutions were instructed to remit 90% of their surplus funds to the Treasury.

This is aimed at reining in wasteful expenditure and ensuring that state corporations contribute meaningfully to the national coffers.

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The president's warning was not limited to loss-making parastatals alone. He has also cautioned profitable corporations against wasteful expenditure, including financing largesse in their parent ministries and unnecessary procurement.

This comprehensive approach to reforming state corporations reflects the government's determination to live within its means, reduce its debt burden, and ensure that public resources are utilised in a more efficient and effective manner.

As Kenya embarks on this radical overhaul of its state-owned enterprises, the stakes are high, and the outcomes will be closely watched.

The success of these reforms will depend on the government's ability to implement them effectively, minimise job losses, and ensure that the resulting entities are more efficient, accountable, and aligned with national objectives.

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