Restructuring of the Kenyan Government and its Effect on Flow of Business

The Kenyan Government is restructuring government services and entities as a means to transform the country’s economy and promote its Bottom-Up Economic Transformation Agenda (BETA). This article talks about what this means for businesses. We’ll cover things like privatization, new laws for railways, online government services, and changes to healthcare. These changes can affect how businesses run and how people get things done in Kenya.

1. The Privatisation Act, 2023 

On 9th October 2023, the Privatisation Act, 2023 (“the Act”) was assented to and commenced on 13th October 2023 repealing the Privatisation Act, 2005. The Act has brought about various amendments that may affect the delivery of public services offered by State corporations, particularly through the privatization of public entities. 

Such amendments include:  

• The establishment of the Privatisation Authority which disbands the Privatisation Commission established under the repealed Privatisation Act, 2005.  
• The enlisting of different criteria is to be considered when identifying and determining the entities to be included in the Privatisation Program. 
• The requirement to have the Privatisation Program ratified by the National Assembly.  
• Inclusion of eligibility criteria to determine eligible participants for the Privatisation Program. 

The Privatisation Act aims to raise government revenue, improve infrastructure, and spur economic development by allowing investors to buy stakes in state-owned entities. The act has led to the enrollment of eleven state corporations for privatization. However, the High Court has temporarily suspended the implementation of the privatization program and Section 21 of the Act. 

2. The Railway Amendment Bill, 2024 

 The Cabinet approved the Railway Bill, 2024 (“the Bill) on 15th January 2024, pending tabling and approval by the National Assembly. Upon the enactment of the Bill, the Railway Regulatory Authority will be established as the railway and safety regulator to oversee open access and licencing of operators. 

 The Bill also proposes to separate the management of the country’s railway sub-sector by unbundling the Kenya Railways’ business of freight, commuter and land development. 

Upon enactment of the Bill, the private sector, investors and county governments will be able to run the railway cities with the Railway Regulatory Authority as the regulator. 

3. The Electronic Government Procurement (e-GP) System in Kenya 

The Kenyan government has approved the full implementation of the Electronic Government Procurement System (e-GP) to improve cash management, transparency, and accountability in public procurement.

The system aims to streamline procurement processes, increase the ease of bidder participation and save on public procurement spending. The government envisages the entire elimination of the internal manual approval procedure to allow the e-GP System to take effect on 1st July 2024.  

All Ministries, State Department and County Governments are anticipated to have fully transitioned to the system while State Agencies/ Corporations and County Agencies will be immediately on-boarded as part of the second phase within the financial year FY2023/24. 

The move is expected to provide real-time access to procurement information, improve access for SMEs, streamline the bidding process, promote fair competition, and reduce corruption. However, the Government should aim to conduct stakeholder engagements to address any challenges that may arise before the full roll-out. 

4. Treasury Single Account (TSA) 

On 15th January 2024, The Cabinet considered and approved the implementation of a Treasury Single Account system for government banking in accordance with Article 206 of the Constitution of Kenya and the Public Finance Management Act. 

The goal towards the move is to advance public finance management concepts and a new paradigm for the administration of public resources. By establishing effective, responsible, and transparent government cash management, the move aims to consolidate the country’s fiscal management and eliminate the need for government borrowing. 

Some of the effects the TSA is likely to have on businesses and the country may include enhanced financial transparency and accountability, prevention of budgetary fragmentation, facilitation of e-government initiatives through a consolidated platform for electronic transactions and increased investor confidence in the government’s financial management. 

Additionally, the Government will have a consolidated view of the total available cash balances at any given time across all Ministries, State Departments, State Agencies and Corporations and other government entities. 

5. The implications of The Cabinet Secretary Ministry of Health vs Joseph Enock Aura & 13 others in Constitutional Petition No. E473 of 2023 (Civil Application No E583 of 2023) 

On 19th January 2024 the Court of Appeal overturned the High Court’s decision to suspend the implementation of the Social Health Insurance Act 2023. This means the act is now in effect, replacing the National Health Insurance Fund. However, some sections of the new act (Sections 26(5), 27(4) and 47(3)) remain suspended pending further legal proceedings. The act applies to all Kenyans, who are expected to register as members and pay a contribution. The employed will be deducted 2.75% while unemployed households will also be paid 2.75% of their income per year. However, the least payable amount will be Ksh.300. 

Finally, the Social Health Insurance Fund Regulations must be passed before the act can fully take effect.

6. The Implications of Kenya Being Declared a Visa-free Country 

On 12th December 2023, the President of Kenya announced the end of visa requirements, ushering in a new era of visa-free travel to the country. Travelers can now enter for up to 90 days for tourism or business. However, they need to apply for an online travel authorization (eTA) before they arrive. The eTA costs $30 and takes about 3 days to process. Key information to apply for an eTA include: 

• Valid passport for at least six (6) months after their planned date of arrival into Kenya with at least one blank page. 
• A recent passport picture OR a selfie picture taken during the application process. 
• Contact details (home address, telephone, email) 
• Travel information and flight itinerary (arrival flight number, date of departure of initial flight in case of connecting flights) 
• Proof of booking for the hotel you will be staying at (if staying with friends, a letter of invitation is accepted) 
• Credit/Debit card information for payment, if applicable. 

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.