Thousands of workers are staring at job losses after the Treasury started merging and dissolving parastatals draining public resources by performing similar functions.
Treasury Cabinet Secretary Ukur Yatani has already collapsed three financial State-owned enterprises (SOEs) to form the Kenya Development Corporation Limited (KDC) in a bid to make them lean, efficient and profitable.
Mr Yatani, in a gazette notice dated July 2 and only made public at the weekend, merged Industrial and Commercial Development Corporation (ICDC), Industrial Development Bank (IDB) and the Tourism Finance Corporation (TFC) following the enactment Kenya Development Bank Act, 2020 to from the Sh100-billion behemoth that will primarily lend to medium and large-scale businesses to spur manufacturing.
The reforms are part of the International Monetary Fund’s (IMF) conditions for the Sh256.3 billion ($2.4 billion) three-year the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) to Kenya signed in February.
The merger comes days after the University of Nairobi, one of the public universities earmarked for financial support from the Treasury, started rolling out cost-cutting measures.
The university on Friday scrapped five offices of deputy vice chancellors and replaced them with two positions of associate VCs, and also reduced its colleges from 35 to just 11.
The cost-cutting drive will most likely lead to loss of jobs at Kenya’s top public university, which employs 1,500 teaching and 2,500 non-teaching staff.
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However, Mr Yatani allayed fears that staff at the three parastatals being merged to form KDC face job losses, announcing that the workers will be automatically incorporated into the new entity.
"Any person employed by a Development Finance Institution (the three SOEs) on or before the vesting date shall be deemed to be an employee of the Kenya Development Corporation Limited," Mr Yatani said in the notice.
The CS’s move has effectively put into motion wheels for merger of similar entities playing the same roles and dissolution of others performing obsolete functions.Treasury said that the purge will be informed by some of the recommendations given by the presidential task force on parastatal reforms in 2013, which have been gathering dust on shelves, alongside the State Corporations Act, 2012, and the 2015 Code of Good Corporate Governance.The taskforce, which was headed by Public Service boss Joseph Kinyua, recommended consolidating SOEs in sectors that have multiple entities performing similar functions, most notably the financial services sector regulators, development finance institutions (DFIs), investment promotion and marketing agencies, and Small […]