To Dissolve or Not? MPs Give Treasury October Deadline on Parastatal Overhaul

The National Assembly has directed National Treasury Cabinet Secretary John Mbadi to complete the dissolution, merger and privatisation of underperforming state corporations by the end of October 2026.

Lawmakers adopted a report from the Budget and Appropriations Committee, chaired by Ainabkoi MP Samuel Atandi, that pushed Treasury to expedite what has become one of the largest restructurings of state enterprises in years.

Nine corporations have been earmarked for dissolution, among them the Kenya Tsetse Fly and Trypanosomiasis Eradication Council, the Kenya Fish Marketing Authority and the Nuclear Power and Energy Agency. The Kenya Film Classification Board and Lapsset Corridor Development Authority also feature on the list.

A separate batch of 42 corporations has been lined up for merger into 20 consolidated entities, a plan the Cabinet first approved in January 2025 as part of a wider fiscal consolidation drive.

The committee flagged a gap between policy and budgeting, noting that some of the entities marked for closure or merger still appear in the proposed budget ceilings without corresponding allocations. Atandi's report described this as a sign of weak alignment between Cabinet decisions and Treasury's own spending plans.

Alongside the mergers and dissolutions, the Cabinet has approved the privatisation of 16 state corporations judged to have outdated mandates. State House said the broader goal is to cut inefficiencies, improve service delivery and reduce the drain these entities place on the national budget.

The push comes against a backdrop of persistent losses across the parastatal sector. A 2025 joint survey by the World Bank and the Competition Authority of Kenya found that the government spends more than one trillion shillings annually, equivalent to six to seven percent of gross domestic product (GDP), keeping loss making corporations afloat.

The reforms are anchored in the Government Owned Enterprises Act, 2026, which gives the Treasury Cabinet Secretary formal power to dissolve or merge government owned enterprises. The law also replaces the old system of political appointments with a competitive recruitment process for chief executives and independent board directors.

Under the Act, a search and selection panel appointed by the Cabinet Secretary must run a transparent and competitive process to nominate independent directors, who serve three year terms renewable once. Candidates affiliated with a political party within the past five years are barred from these positions.

Chief executives must also be competitively recruited by their boards rather than appointed directly by government, and must hold a relevant degree, at least ten years of work experience and five years in senior management.

The overhaul carries direct consequences for sitting executives. Bills already tabled in Parliament seek to dissolve six regional development authorities, including the Kerio Valley Development Authority and the Tana and Athi Rivers Development Authority, a move that would push their chief executives into redeployment elsewhere in government.

Treasury has separately opened recruitment for board positions across dozens of state enterprises, including Kenya Power and Lighting Company, Kenya Ports Authority and Kenya Railways Corporation, as the new governance structure takes shape ahead of the October deadline.