The Kenyan government has unveiled comprehensive reforms targeting state corporations, merging budgets and restructuring several parastatals to enhance operational efficiency in the 2025/26 financial year. The initiative forms part of a broader strategy to cut costs, reduce duplication, and minimize reliance on government subsidies.
Dissolutions and Function Transfers
Under the new framework, at least nine parastatals are slated for dissolution, with some of their core functions being transferred back to parent ministries. The goal is to create a leaner public sector that is better aligned with the government’s priorities for fiscal discipline and performance-based management.
Restructuring for Efficiency
Six state corporations will undergo significant restructuring to realign their mandates with current economic and social development objectives. This move is intended to ensure that each institution delivers measurable value to citizens and operates more sustainably.
Declassification of Certain Entities
The reforms also extend to the classification of some public funds and professional bodies. Certain entities will be declassified as state corporations, removing their eligibility for direct exchequer funding. The government expects this change to encourage self-sufficiency, accountability, and innovative revenue generation.
Sector-Wide Impact
The rationalisation is anticipated to affect key sectors, including agriculture, transport, energy, and education — many of which currently host overlapping agencies. By consolidating operations and merging budgets, the government expects significant savings that can be redirected toward healthcare, infrastructure, and youth employment programs.
Implementation and Workforce Considerations
The reforms will be rolled out in phases to ensure minimal disruption to service delivery. Employees affected by mergers or dissolutions will either be redeployed within the public service or provided with retraining opportunities to meet emerging government needs.
Strategic Goals
With more than 200 state corporations currently in operation, many with overlapping mandates, the government aims to foster a coherent, results-driven public sector. The reforms seek to improve transparency, coordination, and overall performance, creating a system capable of delivering enhanced public services and sustainable economic growth.
