Kenya’s commercial state corporations are poised for transformation following the enactment of the Government Owned Enterprises Act on December 5, 2025. This legislation replaces the outdated and fragmented State Corporations Act, bringing all Government-Owned Enterprises (GOEs) under the Companies Act framework.

Key Reforms Under the New Law

  • Unified Governance Structure: All GOEs, defined as majority national government-owned companies operating commercially without relying on parliamentary appropriations, must now be registered as public limited liability companies.
  • Separation of Mandates: The Act distinctly separates profit-driven commercial activities from public service obligations. Previously, GOEs used commercial revenues to fund public services, causing financial strain and reliance on government bailouts. The new law mandates that public service costs be transparently funded by the Treasury, preserving commercial revenues within the business.
  • Enhanced Accountability: GOEs are required to develop strategic and annual business plans, enter into performance contracts with the National Treasury, and undergo annual evaluations based on audited financial statements. Additionally, they must publish audited reports, performance outcomes, and anti-corruption disclosures.
  • Governance and Investor Protection: Minority shareholders gain the right to elect independent directors proportional to their shareholding, bolstering board independence and safeguarding investor interests, a critical factor for capital market confidence.
  • Private Sector Participation: The law facilitates partial privatisation, strategic investor involvement, and public listings, enabling Kenyans to acquire stakes in profitable state firms while providing the government with new revenue streams.

Implementation Challenges and Outlook

While the legal framework is now robust, the success of these reforms depends on effective enforcement by the Treasury, resistance to political interference by boards, and strict adherence to commercial principles by GOEs. Over time, these changes aim to convert state corporations from fiscal burdens into wealth-generating assets for the country.

Notable state entities such as Kenya Power, KenGen, and Kenya Pipeline have already transitioned under the new regime, with others expected to follow suit.