After privatizing 35 state agencies, the government plans to convert nearly 200 government-owned enterprises (GOEs) into private limited companies, pending a new Bill’s approval.
Under this plan, the Treasury will oversee the establishment and management of these companies. The Treasury’s policy outlines that the law will be amended to turn all commercial agencies into limited private companies to enable them to compete with private businesses for government and public service opportunities.
The policy also indicates that the government will privatize these companies when their continued state ownership is deemed unnecessary. “To refocus the GOEs on their commercial mandate and provide a better legal framework for corporate governance practices, the entire portfolio of GOEs in Kenya will transition into limited liability companies under the Companies Act, 2015,” the policy states.
President William Ruto announced in November last year that 35 state companies would be privatized following the enactment of the privatization law.
The state has already listed 11 corporations, including the Kenyatta International Convention Centre (KICC), Kenya Literature Bureau (KLB), Kenya Pipeline Company (KPC), and National Oil Corporation of Kenya (NOCK), for privatization. Others include Kenya Seed Company Limited (KSC), Mwea Rice Mills Ltd. (MRM), Western Kenya Rice Mills Ltd. (WKRM), New Kenya Cooperative Creameries Limited (NKCC), Numeric Machining Complex Limited (NMC), Vehicle Manufacturers Limited (KVM), and Rivatex East Africa Limited (REAL).
The Privatisation Commission notes there are 240 commercially oriented public enterprises with government ownership through entities like ICDC, IDB, KTDA, and KTDC. Of these, 33 are classified as ‘strategic enterprises’ with the government retaining ownership and active board participation. The remaining 207 are classified as ‘non-strategic enterprises’ and are part of the privatization program. The first phase includes 45 enterprises, with 162 to follow.
A Treasury source mentioned that a team is already working on amending the laws.
The Privatisation Commission states there are 240 commercially oriented public enterprises, and the Treasury is preparing a bill to ensure a smooth transfer of other state agencies under the Treasury from various ministries as private entities. The Public Enterprise Reform Programme (PERP) aims to enhance the private sector’s role by shifting production and service responsibilities, eliminating preferential treatment, and fostering equitable private sector entry into public enterprises.
This initiative seeks to optimize resource use, reduce the Exchequer burden, and streamline public enterprise operations, while also improving the regulatory environment, promoting capital market development, and stimulating economic growth.
The Treasury argues that the current ownership structure, with various institutions exercising ownership rights, leads to inconsistent corporate governance practices and conflicting signals. The new policy focuses on commercial state corporations, now termed GOEs, as defined in Section 210 of the Public Finance Management (National Government) Regulations, 2015. Amendments to various statutes will be required.
The policy states that the Treasury will develop a framework to guide GOEs in fulfilling their non-commercial public policy obligations (PPOs). Furthermore, the policy for managing enterprises will be adjusted for non-commercial state corporations.
The National Treasury, through the Cabinet Secretary to the Treasury, will exercise ownership rights and responsibilities for GOEs. These enterprises will operate commercially and transparently without preferential treatment from the government. GOEs with publicly traded shares will adhere to the same regulations as other publicly listed companies, overseen by the capital markets regulator.
