Political appointees to lose board jobs in Cabinet's parastatal reforms

President William Ruto chairs a Cabinet meeting at State House, Nairobi, on April 29, 2025. [File, Standard]

The President will no longer have the luxury of appointing political allies to plum board positions in State corporations in planned reforms to government agencies that might also see numerous directors of state corporations lose their lucrative board positions.

This follows the Cabinet's approval of a proposed law aimed at improving governance in State-owned entities. The Government Owned Entities Bill 2025, which is now set for debate in Parliament, proposes disqualifying people affiliated with political parties from holding board positions in what will now be referred as Government Owned Entities.

It also disqualifies people with conflicted interests such as affiliations to a state entity as well as interest in organisations that works with such an entity from holding a board position in the same entity.

The Bill, the Cabinet in a statement after a Tuesday meeting said, marks a significant step in reforming the governance and performance of commercial state corporations.

Cabinet met on Tuesday under the chairmanship of President William Ruto at State House, Nairobi and approved the Government-Owned Enterprises Bill, 2025 (GOE Bill, 2025), marking a significant step in reforming the governance and performance of commercial State corporations in Kenya.

"The Bill establishes a new category of commercial State corporations, now termed Government Owned Enterprises. It aims to address long standing inefficiencies such as the appointment of unqualified individuals to leadership roles by introducing a structured, merit- based selection process overseen by an independent panel," said the Cabinet statement issued after a meeting chaired by President WIlliam Ruto at State House in Nairobi.

"The board will elect its chairperson from among the independent members. The Bill explicitly prohibits conflicts of interest for both the chairperson and independent directors, promoting professionalism, transparency, and commercial viability."

"These reforms are part of a broader national effort to modernise and professionalise State-owned enterprises, improve economic efficiency, and restore public trust in public asset management."

Sitting presidents have over the years appointed their allies to boards of state corporations, which has been termed as a reward to close allies who lose elections while in certain instances the appointments have been rewards for support offered to candidates during electioneering periods.

According to the draft bill, among the factors that might disqualify a person from holding a board position include if they have "in the past five years been affiliated with a political party".

Other factors that will disqualify a person from being appointed as an independent director of a GOE include if they have been employed by the entity in the last five years, if they consult or is related to a consultant for the entity or its related parties or is affiliated with a customer or supplier of the GOE and companies funded by the entity.

President Ruto has been on the receiving end for some of his appointments to the boards of different state corporations since he took over in September 2022. More recently, the President has been criticised for appointing to state corporations' boards some of the former CSs that he sacked last year in a cabinet reshuffle following the Gen Z protests.