Presidential Task Force
Presidential Task Force on Parastatals Reforms presented its report to H.E. the President of the Republic of Kenya, Uhuru Kenyatta which highlighted major reforms on State Corporations in the country. The President directed that it be implemented within three months, adding that the sector will be rationalized to remove overlaps, duplication and redundancies thereby trimming the current number of State Corporations from 262 to 187, as recommended by the task force
In its report, the taskforce proposed the establishment of a holding company known as Government Investment Corporation (GIC) to oversee the reforms. Among other duties, the corporation will exercise ownership, investment and oversight roles for all State Corporations on behalf of the National Government; this will include the appointment of all board members.
The Task force was co-chaired by President's constitutional affairs adviser Hon. Abdikadir Mohammed and Mr. Isaac Awuondo, the CEO of the Commercial Bank of Africa. Other members of the task force included Dr Kamau Thugge (PS National Treasury), Mugo Kibati (former Vision 2030 CEO), Korir Sing'oei (Deputy President's Office), Stella Kilonzo (Private Sector), Angalie Mediratta (private sector), Nelson Kuria (CEO CIC Group), Carole Kariuki (CEO KEPSA) and Edward Burbidge (CEO Burbidge Capital Ltd).
The Taskforce undertook;
• A review of the legal, institutional and governance frameworks;
• An assessment of performance, capacity and capabilities of State Corporations to discharge their mandates;
• Alignment of the sector to the Constitution of Kenya, 2010; and
• A review of structural arrangements to enhance their contribution to national development.
It made wide-ranging recommendations for reforms. These included developing the first-ever comprehensive inventory of State Corporations; introduction of new definitions and classifications of State Corporations; renaming the entities formerly known as parastatals to Government Owned Entities (GOEs); and introduction of “Mwongozo”, a new Code of governance for Boards of GOEs. Significantly, the Taskforce also developed a framework for establishment of the National Sovereign Wealth Fund to prepare Kenya’s economy for impending growth of extractive industries and corresponding state initiatives for economic stabilization, sector development and savings for future generations.
The common objectives of establishing a NSWF are to;
1. Protect and stabilize the budget and economy from excess volatility in revenues/exports;
2. Diversify from non-renewable commodity exports;
3. Assist monetary authorities sterilize unwanted liquidity;
4. Increase savings for future generations;
5. Fund social and economic development;
6. Enhance sustainable long term capital growth; and
7. Promote strategic and political objectives.
Overall, the reforms will provide greater cohesiveness in service delivery by Government and increase its preparedness for economic management of natural resources whose exploitation is expected to accelerate in the medium term.
The underlying philosophy of the reforms is the urgent need, inter alia, for scaling up efficiency, effectiveness and accountability of parastatals by re-clustering activities of every sector into policy, development and promotion, regulation and research.
The reforms introduce a consistent policy, legal and institutional framework on governance, management and accountability of GOEs.
1. Separation of commercial activities from the non-commercial roles of policy making, regulation and service delivery;
2. Clear definitions and classification of State Corporations undertaking commercial functions from State and County Agencies that discharge executive, regulatory and service delivery mandates;
3. Development of a single, overarching policy, legal and institutional framework for governance, management and oversight of State and County Corporations and Agencies as proposed under The Government Owned Entities Bill, 2014;
4. Establishment of Government Investment Corporation (GIC) as an investment holding company to exercise ownership and professional management oversight over commercial State Corporations on behalf of the National Treasury;
5. Establishment of the National and Country Agencies Oversight Office (NACAOO) to coordinate National and County Agencies;
6. Rationalizing and consolidating State Corporations and Agencies to ensure they address national development priorities, including Vision 2030; and
7. Establishment of National Sovereign Wealth Fund (NSWF) as proposed under The National Sovereign Wealth Fund Bill, 2014.