Parliament has directed the Treasury Cabinet Secretary John Mbadi to merge and dissolve non-viable State-owned entreprises within eight months.
The National Assembly adopted the report of the Budget and Appropriations Committee (BAC) that recommends that Mr Mbadi expedite the dissolution of non-performing corporations and merge those with duplicate functions by the end of October 2026.
The nine State Corporations earmarked for dissolution include the Kenya Tsetse Fly and Trypanosomiasis Eradication Council, Kenya Fish Marketing Authority, Centre for Mathematics, Science and Technology Education in Africa, President's Award – Kenya and Nuclear Power and Energy Agency.
Others are Kenya National Commission for Unesco, Kenya Film Classification Board, National Council for Nomadic Education and Lapsset Corridor Development Authority.The Cabinet on January 22, 2025, approved the dissolution of the nine State corporations, and their functions transferred to relevant ministries or other government entities.
They also approved is the merger of 42 State corporations into 20 entities as part of fiscal consolidation efforts.
The Cabinet chaired by President William Ruto announced the privatisation of 16 State corporations with outdated mandates, further reducing the number of entities under direct government control.
The restructuring, State House said, aims to eliminate inefficiencies, improve service delivery, and reduce the financial strain on the national budget.
“That the Cabinet Secretary for the National Treasury and Economic Planning expedite the rationalisation, merger, and dissolution of non-viable or duplicative State-Owned Enterprises (SOEs) by end of October 2026 to enhance efficiency and ensure prudent utilisation of public resources,” Samuel Atandi, who chairs BAC said in the report.
“Although the Cabinet approved reforms of State corporations, including the merger and winding up of certain entities, the proposed budget ceiling reflects some of these entities without any corresponding budget allocation, raising concerns about alignment between policy decisions and the budget framework.”
The recently assented to Government-Owned Enterprises Act, 2026 sets out the procedures for dissolution, mergers, and funds of State corporations.
The Act empowers the Treasury CS to dissolve or merge such entreprises subject to the Competition Act upon the approval of the Cabinet and in line with the legislation governing the dissolution of such entities.
The Act states: “Upon approval by Cabinet of the recommendations to dissolve or merge a government-owned enterprise, the Cabinet Secretary for the National Treasury shall cause the dissolution or merger... subject to the Competition Act.”
The new Act repeals 14 Acts of Parliament that created the State corporations, most of them loss-making, and purely reliant on the exchequer for funding. The 14 State corporations will be scrapped and turned into commercial enterprises that will operate for profit, self-financing, and self-sustaining.
There are 18 States Corporation in Kenya and the Act will also affect 66 other entities where the government has shareholding.
The State-backed corporations that are to be turned into companies include the cash rich Kenya Airports Authority (KAA) the Kenya Ports Authority (KPA), the Kenya Railways Corporation (KRC), the Agricultural Development Corporation (ADC), and Kenyatta International Convention Centre (KICC).
Loss-making corporations that are set to be transformed into companies are the Kenya Broadcasting Corporation (KBC), Kenya Literature Bureau (KLB), National Cereals and Produce Board (NCPB), Postal Corporation of Kenya (PCK), and National Mining Corporation (NMC).
Others are the Kenya Fishing Industries Corporation, Kenya Veterinary Vaccine Production Institute, Kenya Meat Commission (KMC), Kenya Post Office Savings Bank, Commodities Fund, and the Nyayo Tea Zones Development Corporation.
“A government-owned enterprise shall operate as a commercial entity and shall operate for profit, be self-financing, be self-sustaining, and be accountable to the public through the National Treasury,” the Act states.
“In addition to commercial functions, they may also perform public service obligations.”
The enterprises that perform public service obligations will operate on a commercial basis and for the purpose of financing the achievement of public service obligations, be funded through the Government budgetary resources.
The new Act defines government-owned enterprise as a company which is a legal person under the ownership and control of the national government, the national government or national government entity is a shareholder with more than 50 percent of the share capital of the corporation, has been assigned financial and operational powers to carry on a business activity, as its main business, supplies goods or services in accordance with ordinary commercial principles, and is financed wholly or substantially from sources that do not require annual appropriation by National Assembly, or imposition of a tax, levy or other charge under legislation.
