Civil servants have been thrown into panic following President William Ruto’s recent declaration that 47 state corporations would be folded up in cost-cutting measures.
The President said state corporations with overlapping roles would be dissolved and their mandate transferred to ministries and state agencies, while others would be merged.
Some of the targeted parastatals have been cited as making immense losses while gobbling up billions of taxpayers' money at the same time.
Government sources said that the parastatals are being mapped and a list would be among the first business of the incoming Cabinet.
Currently, there are more than 340 state corporations, including 105 executive agencies, 79 government-owned enterprises and 78 regulatory agencies.
They also include 32 chartered public universities, 13 university colleges, 17 tertiary education and training colleges, four referral hospitals and 15 research institutions.
The general idea is that entities whose roles are not clear would be scrapped while those with similar functions would be merged by absorption or amalgamation.
An official aware of the goings-on said the changes would largely affect the executive agencies, state-owned enterprises and regulatory agencies.
Entities such as Magical Kenya, Brand Kenya, Export Promotion Council and Kenya Investment Authority are likely to be merged.
“If you look at their roles, they converge on one thing; that is tourism and marketing the country. These can be done by one agency,” the source said.
Entities such as the Export Processing Zones Authority and Special Economic Zones Authority, as well as those dealing with manufacturing will also be collapsed into one.
Also to be reviewed are entities such as those mandated to facilitate trade and those established through Gazette notices.
“Those parastatals made by Gazette notices will be scrapped as per the guidelines issued by the President recently,” the source added.
“The like of Kenya Yearbook Editorial Board is not likely to survive. Kenya Law Reform Commission is also to be restructured or merged with entities performing similar roles,” the official said.
State agencies responding to children’s services such as the National Council for Children Services and Child Welfare Society are also likely to be converged.
National Assembly Committee on Health has also flagged duplication of functions and roles, citing the Ministry of Health for retaining some functions of semi autonomous government agencies.
It also cited the National Cancer Control Programme as performing roles, which fall under the mandate of the National Cancer Institute.
Nuclear Power and Energy Agency is already set to be changed into a department under the Energy ministry. A law is before Parliament on the same.
“The main idea, in the long-term, is to have one agency dealing with tea, health response, legal aid, transport, water and so on,” the official said.
Despite the President assuring the workers of a smooth transition and no job losses, the merger plan is perceived as setting the stage for massive retrenchment.
While it may be easy to transit middle-level officers, challenges loom with posts like chief executive officers and senior directors.
The changes have reportedly put some of the holders of the executive seats on the edge, especially in the wake of the pressure from anti-government protests.
“There is a lot of anxiety among staff. It would be helpful if the list of the targeted corporations is released. As of now, no one knows what would happen next,” a CEO of a state agency in the infrastructure sector said.
The agency he leads is among those which could also have its roles transferred to a single entity for the sector.
At the same time, the government’s guidelines released recently indicated that upon dissolution or merger, cash, assets and liabilities are transferred to the line ministry.
“Upon dissolution of a state corporation, the funds corresponding to government equity in the corporation shall be deposited into the Consolidated Fund,” the guidelines read.
The Public Service Commission, however, has protested the implementation of the rules, citing violations of the constitution.
It argues the guidelines are silent on the PSC Act, PSC Regulations and functions and powers of the commission.
PSC chairman Anthony Muchiri said the commission is the only organisation mandated to appoint, remove, transfer and second state corporation staffers.
Calls for parastatal reforms stem from the bid by the Ruto administration to slash costs.
The International Monetary Fund has long vouched for reforms to address weaknesses in the management of state-owned enterprises.
The lender has trained its guns on Kenya Power and Lighting Company and Kenya Airways as entities it wants the government to reform urgently.
In November last year, the government centralised the ownership of state corporations and oversight roles within the National Treasury.
The government has also been strengthening the boards of directors' authority and has proposed a law change to protect them from political interference.
The head of state also directed the CEOs of state agencies to reduce their recurrent budgets by 30 per cent.
Additionally, commercial state corporations were directed to remit 80 per cent of their profits after tax to the National Treasury.
Regulatory institutions were ordered to remit 90 per cent of their surplus funds to the Treasury.
In 2013, a task force established by then-President Uhuru Kenyatta chaired by former Mandera MP Abdikadir Mohammed recommended the trimming of the number of state agencies from 262 to 187.
According to the National Treasury, only 158 are viable and remain self-reliant, as the rest continue to depend on bailouts.
The task force singled out many policy issues and challenges afflicting parastatals, including lack of clarity on the role they should play in the economy.
It was also established that there was a poor linkage between state corporations’ activity with the national development goals.
The team identified poor governance leading to resource loss and burdening the public purse.
A number of boards were also found to be weak and/or ineffective, leading to failure to provide strategic direction and facilitating their emasculation.
Weak human resources and institutional capacity to attract and retain the skill sets needed to drive performance were noted.
The review also noted a lack of clarity as well as abuse in the process of establishment and dissolution of government-owned entities.
This, they said, led to a lack of an accurate database on the number of state corporations.