The government will move ahead with a new phase of restructuring to cut wastage and promote efficiency, according to a Cabinet dispatch on Tuesday which listed 90 entities that will be affected, triggering fears of job losses in the public sector.
- •The first cabinet meeting this year approved merging of 42 State Corporations into 20 entities to eliminate redundancy.
- •The new changes will also see nine corporations absorbed into their parent ministries, 13 professional bodies and four public funds declassified, six corporations restructured, and 16 state corporations dissolved.
- •In 2023, the government announced privatisation of 11 state corporations to unlock working and investment capital for the entities following dwindling state resources.
“No state corporation function will be lost, and no jobs will be lost as all affected employees will be absorbed into the public service,” State House Spokesperson Hussein Mohammed said in a post on X (formerly Twitter)
“The reforms will address operational and financial inefficiencies, enhance service delivery, and reduce reliance on exchequer,” he added.
The six state corporations proposed for restructuring in the new order include Kenya Utalii College, Postal Corporation of Kenya, Bomas of Kenya, Kenya Roads Board, National Housing Corporation and National Syndemic Disease Control Council.
The Kenya National Assurance Company, Numerical Machining Complex, Scrap Metal Council, Jomo Kenyatta Foundation, and Kenya Year Book Editorial Board will either face dissolution or divestiture.
In the dispatch, Cabinet said the restructuring followed an assessment of 271 state corporations, excluding those earmarked for privatisation, a parallel process that has run into some headwinds. After an appeal by opposition party ODM, the courts temporarily halted the privatisation process which targeted Kenya Pipeline Company, New Kenya Cooperative Creameries (NKCC), Kenyatta International Convention Center (KICC), National Oil Cooperation, Kenya Seed Company and the Kenya Literature Bureau (KLB) among others.
The IMF-backed moves are part of the ongoing structural adjustment programs, which mirror the first phase of similar changes in the late 1980s and 1990s. That phase of restructuring led to massive job losses in the public sector through retrenchments, with estimates of at least 30, 000 jobs lost from 1996 to 2000 only.
While the assurances of no job losses may quell fears in some quarters, it may not be entirely practical to reabsorb all employees within the public sector. A good example of potential job losses is within the units set for declassification, which will see the entities miss out on budgetary allocations necessary to keep their operations running.
Another element is that one of the goals of ongoing austerity measures has been to reduce the public sector wage budget, and moves to keep all employees on the public payroll may not bode well with the overarching IMF-mandated austerity plans.
In July 2024, in the aftermath of controversial Finance Bill 2024, the government said it would dissolve 47 state corporations, send ageing government staff on retirement, suspend some budgetary provisions of confidential budgets, and suspended the purchase of new cars for a year.