New guidelines give Ruto power to micro manage state corporations

President William Ruto addresses congregants during an Interdenominational church service at Amutala Stadium in Kimilili, Bungoma County. [PCS]

The government has issued new guidelines on management of state corporations which give the president a direct hand in running of state corporations.

The new guidelines will set a high threshold in state agencies where employees with a record of three years poor performance will lose their jobs.

The new Guidelines on Management of State Corporations released on Tuesday by Chief of Staff and Head of Public Service Felix Koskei, chairmen and board members of state Corporations, chief executive officers of state corporations; and all other employees serving in state corporations will be rewarded with cash gifts or censure letters based on their work.

The letters will be signed by the president.

The types of rewards and sanctions at the agency level will be in line with performance contracting evaluation and scores.

A state corporation or agency deemed to have achieved exemplary performance in a given financial year will be rewarded appropriately with the Presidential trophy for the top three agencies. There shall be categories for excellent performance and a token of appreciation to the employees in the agency as approved by the Salaries and Remuneration Commission (SRC) from time to time.

On the contrary, an agency that is evaluated to have performed “Fairly” or “Poorly” in a given financial year will be sanctioned with a caution or a censure letter by the President for Fair performance; ensure the letter signed by H.E. the president and cited for poor performance; and non-renewal of contract for the heads of the agency for poor performance.

The rating at the agency Level will include an achievement greater than 130 percentage of the performance targets rated as excellent while that of 49 percent rated as poor and earning a CEO a sacking letter.

Koskei said that the new guidelines coming after the 2004 and the 2015 Mwongozo seek to establish a framework for terms and conditions that promote efficient, effective, and prudent use of public resources, ensuring fiscal sustainability and optimal performance.

Koskei said that people were deeply concerned about how their resources are utilized. Kenya wants a government that works efficiently with fewer resources and is more responsive.

He said the reforms the Ruto administration is institutionalizing are in furtherance of the president's directive on the management of state corporations, where the head of state directed all state corporations to cease wasteful expenditure, including financing excesses in their parent ministries and unnecessary procurement.

Koskei said that as sanctioned by the head of state, the National Treasury has been leading a process of consolidation of state corporations to stop duplicity of functions, wastage, as well as facilitate divestiture from non-strategic sectors.

“We must end excess capacity and ensure Kenya lives within its means, aiming to run a balanced budget within three years,” said Koskei.

Early in the year, President Ruto directed that all commercial state corporations must remit 80 percent of their profits after tax to the National Treasury, while regulatory institutions must remit 90 percent of their surplus funds.

President Ruto noted that his strategic intent was to ensure that by the year 2027, Kenya has no budget deficit and as such urged the government, including State Corporations, to live within its means and with a golden rule expenditure must never exceed revenues collected.

Koskei said the president’s directive did not provide a framework for exceptions, as such everyone must comply.

He said all state corporations must align with the Bottom Up Economic Agenda (BETA) seeking to address the economic turbulence in the country, to eradicate the indignity of hunger, protect the health of those without wealth, provide a decent roof over many more heads, to offer many more Kenyans dignified employment opportunities through value-addition and manufacturing and to lead the nation to economic renaissance by leveraging on technology.

Speaking during The Unveiling Of The Guidelines  On Management Of State Corporations at Bomas of Kenya in Nairobi yesterday Koskei said as part of the transformation in state corporations, the government has undertaken institutional reforms aimed at deepening the ethos of good governance by enhancing accountability by fostering the effectiveness of the public service in delivering public goods and services.

“These Guidelines, issued by the Head of State and  Government as Executive Order No. 3 of 2024, aim to amplify the contribution of State Corporations to the national development agenda, as outlined in our guiding charter with the people of Kenya - Bottom-Up Economic Transformation Agenda (BETA),” said Koskei.

He said the guidelines were a citizen-centric endeavour that had been a byproduct of broad-based stakeholder consultations, seeking to further reposition the public service culture from “status quo of “We do it this way” and entitlement towards initiative and empowerment.

Koskei said that the governance challenges had crept into the management of State Corporations over the years, denying the nation the full benefits of these entities in delivering public goods. By adopting a transformational mindset, the government expects these entities to promote and accelerate economic growth and development, driving Kenya's social and economic transformation. 

He said the success of state corporations hinged on the government’s role in ensuring that public institutions are effectively led and managed. Efforts have been made to reposition state corporations in the delivery of public goods, focusing on interrogating policies on the management and governance of Kenya’s parastatals.

The head of the public service noted that the aim was to determine how best these entities could contribute to the national development aspirations, facilitating the transformation of our country into a great land of prosperity and opportunity for all.

“These efforts have been driven by the need to place the people of Kenya at the centre of the reforms because no one deserves a bigger say in the services the government provides than the Kenyan people, as such the following questions linger and provide the compass to which State interventions shall be anchored around.

He said the questions being asked were, where does Wanjiku, Akinyi stand in this detailed framework?  Is the public sector working for her?  Is she getting value for her precious investment?

Addressing these questions he said involved confronting the corrosive implications of the "mali ya umma" attitude, which has adversely affected the management of many of our State Corporations.

Koskei said that addressing the ever-evolving nature of governance challenges within State Corporations has been a longstanding endeavour.

“Despite these significant interventions, systemic weaknesses have persisted, hampering the optimization of State Corporations' performance,” said Koskei

He noted that the challenges included poor governance leading to resource loss and undue strain on the public purse, multiplicity of institutions requiring approvals and concurrence and multiple reporting lines thus undermining the effectiveness of Boards resultingand inadequate policy coordination leading to poorly defined and conflicting mandates

Other challenges he noted were inadequate performance management framework that fails to link the performance of State Corporations to national development goals, weak Boards with conflicting interests, failing to provide strategic direction and eventual emasculation also a weak human resource and institutional capacity.