Public Sector and Governance

HIGHLIGHTS

In 2025, the following are likely to be the major trends and developments:

• Reform of several state corporations through merger, dissolution, divestment, declassification or restructuring. This will be accompanied by passage of relevant legislation to implement the reforms.

• Complaints against the judiciary leading to the establishment of tribunals by the President upon recommendation of the Judicial Service Commission to investigate the complaints; delays in the hearing and determination of cases; increasing use of ADR mechanisms such as arbitration; and dampened investment climate due to lack of confidence in the judiciary.

• Final Transfer of Devolved Functions effective 16 December 2024 and a transfer of Budgets & Resources from July 2025.

1. Dissolution / Merger / Restructuring of State Corporations

On 21 January 2025 the Cabinet approved several recommendations aimed at reforming state corporations.

These include:
a) Merger of 42 State Corporations with overlapping or related mandates into 20 entities to improve operational efficiency and eliminate redundancy. For instance, the Export Processing Zones Authority and the Special Economic Zones Authority have been merged as well as the Kenya Rural Roads Authority and the Kenya Urban Roads Authority.
b) Dissolution of 9 state corporations and transfer of their functions to relevant ministries or other state entities, e.g. the Nuclear Power and Energy Agency and the LAPSSET Corridor Development Authority.
c) Divestment or dissolution of 16 corporations with outdated functions that can be provided by the private sector e.g. Kenya National Assurance Company and the Kenya National Shipping Line.
d) Restructuring of 6 state corporations to better align their mandates and enhance performance e.g., Kenya Roads Board and the National Housing Corporation.
e) Declassification of 4 public funds currently classified as State Corporations and their return to the relevant ministries with a strengthened governance framework e.g. Water Sector Trust Fund and National Environment Trust Fund.
f) Declassification of all professional organizations currently categorized as state corporations and their exclusion from government budgetary allocations e.g. the Nursing Council of Kenya and Engineers Board of Kenya. These reforms were preceded by an assessment by the National Treasury and were necessitated by increasing fiscal pressures arising from constrained government resources, the demand for high-quality public services, and the growing public debt burden. For more information see here.

Key Implications

• The dissolution, merger, restructuring or declassification of the affected state corporations will enhance efficiency and curb wastefulness in the use of government resources.
• There will be increased private sector participation in the provision of goods/services that were previously provided by some of the dissolved state corporations.
• For most of the restructurings to be implemented supporting legislation will need to be passed or existing legislation amended.

2. Judiciary Purge

Early 2024, the Chief Justice urged the populace with grievances against judges to report them to the Judicial Service Commission (JSC) for investigation and appropriate actions. Furthermore, since the beginning of 2025, the JSC has received a total of 5 petitions/complaints against judges. Some of the grounds that have been recently relied on for removal of judges include:

i. A Judge’s act of denying litigant the right to cross-examine witnesses (DP Rigathi’s complaint against Esther Maina J.)
ii. Delivery of a ruling contrary to the weight of evidence, trite law and binding authorities submitted by parties.(Nelson Havi’s complaint against Hon. Alfred Mabeya. J)
iii. Lack of leadership qualities, loss of public confidence in the supreme court as a result of its decisions. (Havi’s complaint against CJ. Koome and supreme court judges)
iv. Absence from court-Nelson Havi has recently taken issue with the judicial officers not sitting because they are away on official duties. This, according to him, has led to the delay in administration of Justice.

The Commission on Administrative Justice (CAJ) has weighed in to push the JSC to publish all complaints lodged against judges and their outcomes on their public website and other platforms to enhance transparency. In response, the JSC reaffirmed its commitment to transparency, accountability, and the rule of law in the handling of complaints and petitions involving judges, judicial officers, and staff.

Key Implications

• More complaints against judges are likely to be submitted in 2025 leading to the setting up of tribunals by the President upon recommendation of the Judicial Service Commission to investigate these complaints.
• There may be delays in the hearing and determination of cases as judges against whom complaints have been or will be received will not be available to sit.
• Businesses and individuals may increasingly resort to alternative dispute resolution mechanisms (ADR) such as arbitration owing to the perception of corruption in the judiciary.
• The removal of judges especially on corruption allegations is likely to negatively impact the overall business perception in the country due to lack of confidence in the judiciary.

3. Final Transfer of Devolved Functions (Budgets & Resources)

In December 2024, the 11th Ordinary Session of the National and County Governments Coordinating Summit met following which the summit issued a communique communicating following resolutions-

a) All devolved functions pending transfer that have been unbundled and have been mutually agreed by the two (2) levels of government were to be gazetted on 16th day of December 2024 to facilitate the seamless transfer to the county governments; and
b) The corresponding resources related to the unbundled and gazetted functions are to be transferred to the county governments commencing July 2025.

Consequently, vide Gazette Notice Vol CXXVI- No. 219 dated 16th December 2024, the Chairperson of the Intergovernmental Relations Technical Committee gazetted the Delineation of the National Government and County Government Functions on:

• Trade Development and Regulations;
• Firefighting Services and Disaster Management;
• County Health Services;
• County Public Works and Services;
• County Transport;
• Natural Resources and Environment Conservations;
• Agriculture;
• Animal Control and Welfare;
• Control of Drugs and Pornography;
• Land Survey and Mapping and Boundaries and Fencing;
• Cultural Activities, Public Entertainment and Public Amenities;
• Pre- Primary Education, Village Polytechnics, Home craft Centers and Childcare Facilities.

Key Implications

Following the issuance of the communique in December, there is an effectual transfer of the devolved functions as provided for under the Fourth Schedule Part 2 of the Constitution of Kenya, 2010 from the national government to the county government. However, the National Government retained certain roles including development of national policies, norms, frameworks and standards.

Disclaimer:

The information provided in this article is intended for informational purposes only and should not be construed as legal advice. Don’t hesitate to get in touch with us at info@koassociates.co.ke for any queries or legal advice.