CEOs of parastatals to serve for life as state removes age limit

Head of civil service Joseph Kinyua at the Kasarani Sports Complex, Nairobi. [Photo by Elvis Ogina/Standard]

The Government has scrapped age and term limits for chief executive officers of State corporations.

The directive means that the CEOs can be re-appointed as many times as the appointing authority deems fit and work beyond the mandatory retirement age of 60.

The removal of term limits is contained in a circular issued by Head of Public Service Joseph Kinyua dated February 27, 2018, and titled ‘Terms of Service for State Corporation’s Chief Executive Officers’.

Under the current regime, depending on the relevant Act creating the corporations, CEOs serve for a between three and five years and are eligible for re-appointment for a second term depending on their performance. The law also requires that the executives retire upon attaining 60 years.

Mr Kinyua’s circular has overturned this requirements.

“The Government has noted lack of clarity on terms of service for chief executive officers of state corporations and concerns at service period, which in some instance has led to litigation,” Kinyua’s circular copied to all Cabinet secretaries, the Attorney General, and all principal secretaries.

The circular states that the terms of service for CEOs are contractual and renewable based in performance and business requirements, and that they are not subject to the general public service policy on mandatory retirement at 60 or 65 years or limit as to the number of terms served.

“The Circular No. OP. CAB.2/7A of March 20, 2009 on review of mandatory retirement age for public servants is therefore, not applicable to State corporations’ chief executive officers,” wrote Kinyua, referring to the policy that raised retirement age from 55 to 60 years.

State corporations

“You are required to bring the contents of this circular to the boards of directors of State corporations under your docket and to ensure they have put in place a robust mechanism for ensuring performance of CEOs and leadership requirements over time,” Kinyua states.

It is not clear if the new directive supersedes section 80 of the Public Commission Act that bars public officers from serving beyond the 60-year age limit.

Weed out officials

The section states: “ A public officer shall retire from the service with effect from the date of attaining the mandatory retirement age; and the commission or other appointing authority shall not extend the service of such retired public officer beyond the mandatory retirement age.”

According to the 2013 report of the Presidential Task Force on Parastatal Reforms, there are 257 State corporations in the country.

The report proposed mergers of State firms for efficiency but it has never been implemented. It stipulated that for the retained agencies no new contract of service shall be offered to a CEO who has served in the same State agency for two terms.

The proposal was designed to weed out entrenched officials and promote accountability.

The report proposed that the CEOs of retained agencies be allowed to serve their unexpired terms subject to performance and fully meeting the requirements for appointment or be allowed to serve the unexpired term up to a maximum period of six months.

The push to have the top civil servants serve beyond retirement age is likely to influence contract terms and succession plans for top State executive officers. It also adds to concerns about the ageing public service workforce and obstacles to succession management.

Data from the December, 2016 payroll revealed that 35 per cent of national government employees are aged between 51 and 60 years while 53 per cent are above 46 years.

Majority of employees in management positions are over 46.

Court case

The decision to exclude CEOs from retirement age caps comes at a time when the Government is battling to retain Kenya Revenue Authority Commissioner General John Njiraini, whose term has expired.

The KRA boss attained the age of 60 on December 19 last year while his second and final term expired on February 3 this year.

A case has been filed in court to have him replaced.

Central Bank of Kenya Deputy Governor Sheila M’Mbijjewe, who attained the official retirement age on Mach 6 this year, is still in office.

CBK Governor Patrick Njoroge has said that his deputy would serve her full contract, which runs to mid next year.

In November 2016, Industrial Court Judge Nelson Abuodha issued orders stopping Energy Cabinet Secretary Charles Keter from renewing then Kenya Power CEO Ben Chumo’s term, ruling that he had reached the retirement age of 60.

The ruling also saw the then director general of the Energy Regulatory Commission, Joe Ng’ang’a, leave eight months before his contract expired. He was 61.