State House Spokesperson Hussein Muhamed has allayed fears that hundreds could lose jobs as the government seeks to dissolve and restructure some state corporations.

On Tuesday, January 21, 2024, the cabinet approved plans to dissolve nine state corporations and merge 42 into 20 as part of austerity measures.

“No State Corporation function will be lost, and no jobs will be lost as all affected employees will be absorbed into the Public Service. This is line with the commitment to streamline government operations, reduce waste, and curb excesses. The reforms will address operational and financial inefficiencies, enhance service delivery, and reduce reliance on the Exchequer.,” Hussein stated.

In a statement after a cabinet meeting at the Kakamega State Lodge, State House announced that the National Treasury assessed 271 state corporations, excluding those earmarked for privatization.

“Nine State Corporations will be dissolved, with their functions transferred to relevant ministries or other State entities, while 16 corporations with outdated functions that can be provided by the private sector will be divested or dissolved,” the statement read in part.

“Six State Corporations will undergo restructuring to better align their mandates and enhance performance. Additionally, four public funds currently classified as State Corporations will be declassified and returned to the relevant ministries with a strengthened governance framework.”

The cabinet also resolved that all professional organisations currently categorized as state corporations will also be declassified and will no longer receive government budgetary allocations.

“These reforms have been necessitated by increasing fiscal pressures arising from constrained government resources, the demand for high- quality public services, and the growing public debt burden,” the statement added.

Many state corporations have struggled to meet their contractual and statutory obligations, leading to an accumulation of pending bills amounting to Ksh94.4 billion as of March 31, 2024.