Privatisation plan sparks oversight fears

Cabinet Secretary for National Treasury and Economic Planning John Mbadi before The Standing Committee on Devolution and Intergovernmental Relations to deliberate on the commercial bank accounts operated by county governments contrary to the law at Bunge Towers, Parliament, Nairobi. July 17th,2025.[Elvis Ogina, Standard]

On November 21, 2025, the attention of all Kenyans was fixed on television, radio, and social media to hear President William Ruto’s State of the Nation address before Parliament.

They had earlier seen him at the State House signing a document, the now Government Owned Enterprises Act (GOE) of 2025, that would pave the way for an overhaul of government-owned corporations by centralising the shareholding function to the National Treasury and commercialising them.

The document made its way to the Kenya Government Printer for gazettement, under the Kenya Gazette Supplement Acts, 2025, while the President asserted that his quest to make Kenya a Singapore had started.

The newly signed Act (GOE) had repealed the law establishing 65 state-owned corporations, thereby paving the way for a shareholder model and their sale to private sector players through share sales, Initial Public Offering (IPO) listings, shareholder agreements, and even charging them for loans. In addition, it gave the government an easier route to divest or privatise them.

Members of Parliament gave the Treasury Cabinet Secretary, John Mbadi, the knife and the yam to gazette when the Act would take effect.

Insiders indicate that the CS gazetted the Act to take effect on December 5, 2025, in which all the targeted State Corporations ceased being fully owned by the government.

On December 15, the Cabinet shared news that the Sh5 trillion idea had commenced following the approval of the establishment of the National Infrastructure Fund and Sovereign Wealth Fund.

The Cabinet indicated that the money to fund the behemoth would be from the mobilisation of domestic resources, strategic monetisation of the mature public assets, democratisation of ownership through Capital Markets and deployment of the national savings.

The government would then unlock large-scale sector capital to finance priority investments while reducing reliance on public borrowing.

“Under the new framework, all privatisation proceeds will be ring-fenced and invested strictly in public infrastructure projects that generate and preserve long-term value. Every shilling invested through the Fund is expected to crowd in up to Sh10 additional shillings from long-term investors, including pension funds, sovereign partners, private equity funds and development finance institutions,” reads part of a press release dated December 15, 2025.

The document indicates that the Act is meant to reconstitute the current parastatals into public limited liability companies, in a bid to offer them for privatisation.

However, a senior government official privy to this, and who commented on condition of anonymity, told The Standard that the elephant in the room is how the corporation’s ownership will be vested in private persons without Parliament’s oversight and how the funds will be accounted for, when not budgeted for.

The source claimed that Kenyans should expect few, if any, bailouts for non-performing companies, adding that it will be a herculean task to convert legacy parastatals to profit-making entities without restructuring or selling them off to new strategic investors.

“As of Dec 5, they are no longer state corporations. Who are their shareholders? Who will audit them? Why do government assets go to a limited liability company?” the source questioned.

Some of the Acts repealed include the Agriculture Finance Corporation Act, the Kenya Airports Authority  Act, the Kenya Ports Authority Act, the Kenya Railways Corporation Act, the Kenya Broadcasting Corporation Act, the National Mining Corporation Act, and the Kenya Meat Commission Act, among others.

The Act also altered the meaning of the State Corporations Act by introducing GOE. It, however, indicates that it will not apply in corporations that are established for non-commercial purposes.

Amongst the critics of the government move is senior lawyer Paul Muite. He argues that the fund will be entrusted to one individual.

“National Infrastructure Fund illegally removes Constitutional controls or safeguards and places the use of those Funds in the hands of one individual. Expect unbridled looting and kickback. The debt burden is being casually tossed onto Kenyans,” Muite wrote on his X account.

On the other hand, lawyer Willis Otieno says that the government cannot sell a corporation and have the resources managed and or run by a different entity. According to him, Article 2(6) is clear that the funds ought to be wired to the consolidated fund.

“Go to Article 2(6)… Those enterprises were set up with taxpayers’ money. The receiver of that money should be the consolidated fund, before it can be appropriated. When you create another fund, you are bypassing the appropriation. Appropriation is done by the Parliament. The mischief is moving the role of parliament in budget-making. Forget all they are doing, they are creating a way of spending without oversight,” claimed Otieno.

In the schedule, the listed companies include East African Portland Cement Company Limited, the Kenya Electricity Generating Company Limited, Kenya Power and Lighting Company Limited, Kenya Re-Insurance Corporation Limited, and Agricultural Finance Corporation, Kenya Airports Authority, Kenya Development Corporation, Kenya Literature Bureau, Kenya Ports Authority, Kenya Development Corporation, Kenya Railways Corporation, New Kenya Co-operative Creameries Limited, Agricultural Development Corporation, the Kenya Seed Company Limited, Kenyatta International Convention Centre, the National Cereals and Produce Board, the National Housing Corporation and the Numerical Machining Complex Limited.

Others include the Kenya Petroleum Refineries Limited, Kenya Post Office Savings Bank, University of Nairobi Enterprises and Services Limited, Bomas of Kenya, several sugar milling companies, such as Chemilil Sugar, Sony Sugar, among others.

But the government’s big headache lies in the mergers and sales of corporations, which have become a myriad of courts involving public participation.

However, the new law grants the CS powers to originate or review recommendations for the dissolution and mergers of the enterprises.

At the same time, he or she has the power to dictate how the same will be done.

“Upon approval by Cabinet on the recommendations to dissolve or merge a Government Owned Enterprise, the Cabinet Secretary shall cause the dissolution or merger of the Government Owned Enterprise with another, and the merger shall be subject to the Competition Act,” it reads in part.