- President William Ruto chaired the first Cabinet meeting of the New Year 2025 at Kakamega State Lodge on Tuesday
- Cabinet approved the abolition of outdated government agencies, including the Kenya Tsetse Fly and Trypanosomiasis Eradication Council
- The chief analyst of the FX Pesa market, Rufas Kamau agreed with the proposal of the Council of Ministers to stop loss-making organizations, noting that it is necessary to reduce public spending
The President's Cabinet William Ruto has approved the dissolution of nine government agencies, a situation that signals difficult times for Kenyans in public agencies.
Source: Twitter
The Cabinet noted that the parent ministries would take over the functions of the defunct public bodies, indicating looming job losses.
“Nine government agencies whose powers can be exercised under the ministry are proposed to be abolished after the responsibilities are transferred to the ministry or other government agencies.”
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Why did the Cabinet approve the dissolution of 9 government agencies
It said that increasing budgetary challenges stemming from limited government resources, the need for high-quality public services, and increasing public debt burden forced the reform.
“These reforms have been forced by the increasing financial pressures arising from government resources, the demand for better public services, and the increasing debt burden,” it explained.
According to the government's main decision-making body, many government agencies have failed to meet their legal and contractual commitments, resulting in outstanding bills of KSh 94.4 billion as of March 31, 2024.
Which public organizations will be dissolved?
- Kenya Tsetse Fly and Trypanosomiasis Eradication Council.
- Kenya Fish Marketing Authority.
- Center for Mathematics, Science and Technology Education in Africa.
- President's Award – Kenya.
- Nuclear Energy and Energy Agency.
- Kenya National Commission for UNESCO.
- Board of Film Classification in Kenya.
- National Council on Immigrant Education.
- LAPSSET Regional Development Authority.
Why should the government reduce spending?
FX Pesa senior market analyst Rufas Kamau agreed with the Cabinet's proposal to abolish loss-making corporations.
Kamau suggested that instead of taxing Kenyans too much, the government should reduce its size, which will reduce normal costs.
“A long-term solution could include reducing the size and spending of government, dealing with corruption that has led to the waste of taxpayers' money, providing tax breaks for low-income people and dependents, and reducing tax rates on basic goods like money, gasoline , agriculture, electricity and communication products,” Kamau told TUKO.co.ke.
What conditions did the IMF give to Kenya?
The dismantling of state-owned enterprises is part of the reforms offered to Kenya by the International Monetary Fund (IMF), which advised the government to liquidate loss-making public enterprises.
The Bretton Woods Institution set conditions for Kenya to fulfill before applying for additional loans.
One of the conditions was to restructure loss-making state-owned enterprises to either return to profitability or start operating more efficiently.
National Treasury established a High Level Financial Risk Committee tasked with assessing and reporting on financial risks from government agencies, agencies and government authorities (SAGAs).
The committee was mandated to conduct a comprehensive year-long study to assess the risks posed by SAGAs/state-owned institutions.
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Source: TUKO.co.ke
