Job fears over planned changes at State corporations

By Robert Nyasato and James Mbaka

Kenya: There is a possibility of job cuts as implementation of radical reforms at State corporations gets underway.

In a report handed over to President Kenyatta on Tuesday, The Task Force on Parastatal Reforms chaired by former Mandera Central MP Abdikadir Mohamed proposes to scrap a whopping 87 State corporations.

In the 104-page report, State corporations that will be spared the axe will be renamed Government Owned Entities (GOEs).

The report says all the staff serving in State agencies being merged shall be presumed to be staff of the new GOEs.

The boards of the new GOEs and the respective Cabinet Secretaries shall undertake staff placement in the developed organisational and staff establishment structures.

“Any staff who don’t fit in the new structure may be redeployed elsewhere in the public service or be handled as per existing Government policy,” the report says alluding to possible job cuts.

The implementation of the reforms will commence immediately and take a maximum of eight months.

Out of the existing 262 State corporations, some 87 will be abolished reducing them to 173. However, an additional 14 new GOEs will be created bringing the total to 187 after reorganisation.

Redefinition and reclassification will see 21 State corporations and agencies dropped while a further 22 will have their functions transferred to the ministries.

Anchored on the Constitution, some 18 parastatals were devolved to county governments while 28 were merged to avoid duplication of functions.

The task force made 15 recommendations to facilitate the repositioning, rationalisation and consolidation of GOEs to ensure they are in tandem with the national development agenda and Vision 2030.

The report observes that if the recommendations are fully implemented, it will increase the wealth generated by the parastatals, meaning most of the scrapped State corporations were a drain on the exchequer.

The task force wants the president to adopt the report as policy immediately and Parliament to create an enabling environment for the new entities through enactment of the GOE Bill 2013 by December.

It also wants the Government Investments Company (GIC) incorporated to provide oversight and the institutional framework for GOEs.

The GIC will have six months to establish State corporations by incorporating them under the Companies Act by June next year, effectively transferring Government shareholding to GIC.

Sweeping powers

The task force, however, gave sweeping powers to the President to appoint and determine the salaries of the GIC board.

The Presidents is expected to make appointments of the GOE chief executives and constitute the boards beginning January next year.

The team proposes establishment of the National and County Agencies Oversight Office (NACAOO), which will develop guidelines for creation and dissolution of corporations, State and county agencies.

It wants the Government to undertake a complete inventory of physical assets and liabilities of all State Corporations, State Agencies (SAs) and County Agencies.

Also proposed is the establishment of a human resource data base and an audit of all the employees.

The report further recommends development of a remuneration, incentives and rewards policy and guidelines for GOEs.

It proposes development of a uniform code of governance and leadership applicable to all GOEs while at the same time recommending for funding of research institutions through a clear research funding policy.

The task force wants an appropriate model for university and tertiary institutions funding developed to streamline funding based on outcomes instead of enrolment numbers.

In other proposals, the team recommends re-organisation of GOEs through rationalisation and consolidation and establishment of the Kenya Sovereign Wealth Fund Commodity with an initial capitalisation of Sh10 billion.

It also recommends review of the procurement and disposal framework to remove restrictive provisions that hinder the ability of State Corporations to compete effectively with other players.

Having received the report, the President is now expected to form a GOEs Reforms Implementation Committee(GRIC) to oversee and monitor the implementation process. GRIC will provide monthly progress reports to the President.

The committee will comprise nine members, including Head of Public Service Francis Kinyua as chairman, Presidential Advisor on Constitution and Legislative Affairs Abdikadir Mohamed and Treasury Principal Secretary Kamau Thuge.

Other GRIC members will include the State Corporations Advisory Committee Secretary, Inspector General of State Corporations, Land Law Reform Commission secretary, a representative of the private sector and two persons appointed by the president.

Accelerate growth

The GRIC will have a secretariat of six persons appointed by Kinyua.

Once in place, the GOEs will have an expanded mandate in line with Vision 2030.

The GOEs are expected to play an important role in promoting and accelerating economic growth to make Kneya a globally competitive country with a high quality of life. The new units will support efforts aimed at building the institutional capability and technical capacity of the state in facilitation and promoting national development.

They will also improve delivery of public service including meeting basic needs of citizens while also supporting creation of employment.

The task force found out that most of the parastatals it recommended for closure were poorly linked to the national development agenda and operted under multiple legal and regulatory regimes.