Kenya’s parastatals—or state corporations— have historically played a critical role in delivering public services, driving industrial growth and supporting national development.
However, the current state of these entities raises significant questions about their efficiency, accountability, and overall contribution to economic growth.
Recent government reforms signal a bold and necessary step to address operational inefficiencies, reduce fiscal pressures and realign the mandates of these institutions with the country’s evolving economic priorities.
With 271 state corporations assessed, recommendations to merge, dissolve or restructure many of them are both timely and vital.
These reforms provide a unique opportunity to enhance service delivery, reduce reliance on the Exchequer and foster economic sustainability.
Many of Kenya’s parastatals have struggled to meet their contractual and statutory obligations, resulting in massive inefficiencies.
The National Treasury reports that pending bills by these corporations amounted to Sh94.4 billion as of March 2024, highlighting the severity of their financial mismanagement.
The proposed reforms, which include merging 42 corporations into 20 entities, dissolving nine with redundant mandates, and divesting 16 corporations that can be better managed by the private sector, aim to cut excesses and eliminate duplication.
This is expected to reduce administrative costs and enhance the effectiveness of service delivery.
Additionally, restructuring six key parastatals to better align with their mandates will optimise performance.
The declassification of professional organisations and public funds as state corporations, coupled with the return of governance oversight to the relevant ministries, underscores the government’s commitment to creating lean, focused institutions.
While the proposed changes are commendable, implementing them will require navigating entrenched interests, bureaucratic inertia and potential resistance from stakeholders.
The challenge is also to ensure that reforms do not disrupt service delivery, especially in critical sectors such as health, education and agriculture.
However, the benefits of these reforms far outweigh the risks.
A streamlined parastatal sector will free up resources to invest in high-priority areas such as infrastructure, universal health coverage and the bottom-up economic transformation agenda.
It will also reduce Kenya’s reliance on debt to fund recurrent expenditures, a critical step in managing the nation’s burgeoning public debt.
Furthermore, encouraging private sector involvement in areas traditionally dominated by parastatals could drive innovation and improve service delivery.
For instance, divesting outdated entities such as the Kenya National Shipping Line and Pyrethrum Processing Company opens opportunities for private investment and competitiveness.
The success of these reforms will hinge on strong leadership and unwavering transparency.
The government must communicate clearly with the public about the rationale and expected outcomes of these changes.
Equally, a robust monitoring and evaluation framework should be established to ensure that the intended goals of efficiency and economic growth are achieved.
MACHEL WAIKENDA
Political and communications consultant | @MachelWaikenda
