June 13, 2024
Gov't Set To Restructure 6 State Agencies After Selling Their Shares

Gov’t Set To Restructure 6 State Agencies After Selling Their Shares

President William Ruto’s administration has decided to sell shares in six key institutions as part of an ambitious plan to restructure state agencies.

According to a Cabinet dispatch issued on Tuesday, June 11, the government intends to divest 25.3 percent of its shares in East African Portland Cement Limited, with the National Social Security Fund (NSSF) holding 27 percent, as well as significant stakes in five other companies.

The state will sell 3.36 percent of its shares in the Nairobi Securities Exchange (NSE), 2.41 percent in the Housing Finance Company of Kenya Limited, 1.1% in Stanbic Holdings, and 0.9% in Liberty Kenya Holdings. and 17.2 percent in Eveready East Africa PLC through the Kenya Development Corporation (KDC).

President Ruto has expressed his desire to eliminate reliance on state funding for underperforming state agencies.

The cabinet argued that this divestiture is necessary for institutional reforms aimed at revitalizing the economy and improving governance within state corporations.

“The divestiture in the six companies, through the sale of shares at the Nairobi Securities Exchange, will optimise the contributions of these investments in the realisation of our national development aspirations,” the Cabinet stated.

This move signifies a significant shift towards reducing governmental financial burdens by selling off shares in these entities.

As part of this reform, the government intends to close 25 state corporations and transfer the management of another 25 to private companies.

The goal is to reduce wasteful spending and alleviate the financial strain on the exchequer caused by underperforming state enterprises.

“The money some parastatals make does not belong to their boards or management. It belongs to the people of Kenya as a return on investment. We have to shut down some of those loss-making parastatals. We must end excess capacity,” President Ruto declared.

The National Treasury is expected to save billions of shillings if this plan is implemented, with increased cash flow into state coffers and reduced exchequer outlays.

In April, Ruto threatened to close down loss-making government institutions within three years if they failed to improve their financial performance.

This threat materialized in May when the government began merging and dismantling state corporations via the National Treasury.

The Head of State directed parastatal Chief Executive Officers (CEOs) to reduce their recurring budgets by 30%.

Furthermore, state-owned commercial enterprises were required to remit 80 percent of their after-tax profits to the Treasury.

“We will give you instructions on what to do with the remaining 20 percent,” Ruto stated.

He also directed regulatory institutions to remit 90 percent of their surplus funds to the National Treasury. “There will be no exceptions. Everyone must comply,” he asserted.

President Ruto addressed the chairpersons and CEOs of state enterprises at State House Nairobi on Tuesday, criticizing some agencies’ persistent losses, which have become a drain on the treasury.

“It is illogical. We need to close down some of these loss-making parastatals. We have to end overcapacity,” he insisted.

“We must start living within our means and stop the habit of running huge budget deficits. In three years, we must have a balanced budget. It won’t be easy, but we must do it,” Ruto concluded.

The President underscored the gravity and urgency of the reforms needed to steer Kenya towards a more sustainable economic future.

Gov’t Set To Restructure 6 State Agencies After Selling Their Shares

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