The truth about State-owned enterprises

On the very first day of the pilot, a riot ensued at the port. “Menejment wameleta ma-foreina, wameuzia wazungu porti yetu!” Chaos, anarchy and fear fanned the port.

Turns out, our new system would surface a number of “ghost workers” and it was their malevolent spirits that weaved gracefully amongst the legitimate casual workers, spreading rumours and formenting hate. We prevailed, after much management angst. And the spirits of the ghost workers disappeared.

A video recently went viral on various social media platforms, where the speaker waxed not-so-lyrical about how Kenyan parastatals had been privatised via the Government Owned Enterprises (GOE) Act 2025.

The speaker went further to allege that 63 parastatals had already been privatised and some sold to foreigners and local companies who would later list the shares at the Nairobi Securities Exchange and reap the profits thereafter.

As a wise CEO once told me, never counter an emotional argument with facts. I’m not one to follow conventional wisdom, so here come the facts with which I hope those who are spreading that video will at the very least familiarise themselves with.

It bears noting that the current parastatal reform can be traced back to the Kibaki administration with the tabling of the September 2013 report by the Presidential Task Force on Parastatal Reform.

The document commonly known as the Abdikadir Report on Parastatal Reforms, and named for one of the two joint chairmen of the Task Force, Abdikadir Mohamed and Isaac Awuondo, laid out a thorough framework for how government owned entities could be managed commercially and professionally to meet Kenya’s strategic Vision 2030 goals.

The report introduced a new legal framework, the Government Owned Enterprises Bill 2013, to replace the State Corporations Act.

Sadly, the report was placed deep in the back corner of a building on Harambee Avenue by “the then owners of power” whose deeply entrenched noses would have been put out of joint if their board appointing power wings were clipped.

But somewhere deep in the annals of the State Corporations Advisory Committee and within the Office of the President, some people continued to work hard at the thankless task of bringing much needed reform to State agencies. Which work has now culminated into an Act of Parliament that is in full force as we speak.

The purpose of the GOE Act 2025 is to overhaul how Kenya owns, governs, manages, and holds commercially oriented public entities accountable. In practical terms, it is intended to move public ownership away from a fragmented parastatal model and toward a more disciplined, transparent and commercially driven ownership framework.

The core purpose of the Act is to: Establish a clear legal and ownership framework for Government Owned Enterprises;
ensure GOEs operate commercially, profitably, and with greater financial discipline;

reduce reliance on the Exchequer by making GOEs self-financing where possible; improve governance through professional boards, independent directors and clearer accountability; separate the government’s role as owner/shareholder from its role as policy-maker or regulator; require stronger performance management, reporting, disclosure and audit obligations, and
clarify how non-commercial public service obligations are assigned, costed, funded, and monitored.

The Act can fundamentally change public ownership by treating state-owned commercial entities more like accountable investment assets rather than administrative extensions of ministries. 

This means firstly moving from political control to shareholder discipline: the National Treasury becomes the central ownership authority, reducing fragmented ministerial control and helping the government act more consistently as a shareholder.

Secondly, it means moving from subsidies to commercial sustainability: GOEs are expected to finance themselves, operate profitably, and justify any public funding through clearly defined public service obligations.

Thirdly, the Act envisages a move from weak politically motivated boards to professional governance: Independent directors, fit-and-proper criteria, competitive appointments and board accountability should reduce patronage and improve strategic oversight.

Fourthly, the GOE Act moves from scattered entities to rationalised ownership. The Act supports mergers, dissolutions, restructuring, and transition into Companies Act structures, enabling government to reduce duplication and focus ownership where there is strategic or economic value. 

Finally, the Act gets the Kenyan government to shift its focus from passive State ownership to active portfolio management which means that Kenya can manage GOEs as a public investment portfolio thereby deciding which entities to retain, merge, list, partially privatise, or wind down based on performance, fiscal impact and public interest.

Over the next couple of weeks, I’ll go into the second schedule to the Act which defines which parastatals are to be converted into companies as well as the notorious kettle of fish that is the framework around appointment of board directors.

Carol Musyoka is a former banker and is currently a corporate governance specialist.