Committee calls for unified legal framework for commercial state-owned enterprises

Kenya is preparing for a major shake-up of its government-owned enterprises, targeting decades of inefficiency and unprofitable operations.

The Departmental Committee on Finance and National Planning, chaired by Molo MP Kimani Kuria, has recommended that Parliament approve the Government Owned Enterprises Bill, 2025.

The legislation is designed to turn state firms into commercially disciplined entities while ensuring they contribute effectively to the national treasury.

The Bill focuses on roughly 60 commercial state-owned businesses that operate in sectors critical to the economy, including energy, transport, agriculture, and manufacturing.

Many of these corporations have long struggled with persistent losses, mismanagement, and reliance on government bailouts despite having a clear mandate to make profits.

“The Committee, having considered the Government Owned Enterprises Bill (National Assembly Bill No. 40 of 2025), recommends that the House approve the Bill with amendments,” Kuria said in the report presented to Parliament.

Central to the proposed law is a drive to professionalise governance in state corporations.

The Bill introduces a unified legal structure for all commercial GOEs, replacing the current mix of Acts of Parliament, legal notices, and individual instruments that have led to inconsistent management and oversight.

Under the new framework, all state businesses will be incorporated under the Companies Act, ensuring standard rules for operation, accountability, and financial performance.

A major reform is the formal handling of public service obligations (PSOs). Historically, many state firms have recorded losses by citing public service duties that are vague, uncosted, and unfunded.

The Bill requires all PSOs to be fully documented, costed, and backed by explicit agreements with the National Treasury. Any unprofitable activity must now have a clear funding plan or subsidy, ensuring transparency and accountability.

“This introduces long-missing transparency and gives clarity on which losses are justified and which stem from poor governance or inefficiency,” the Bill states.

The Committee’s report highlights that weak oversight, political interference, and poor management have turned many state corporations into drains on public resources rather than profitable assets.

The reforms aim to curb financial wastage, improve performance, and ensure that commercial state enterprises deliver on their mandate.

While Kenya has over 240 state corporations, only a fraction, around 60, operate as profit-driven businesses, underscoring the need for sweeping changes.

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If approved, the Bill will mark the most extensive effort in decades to bring government businesses under stricter commercial discipline, improve transparency, and reduce fiscal risk to the national budget.