Frequently Asked Questions (FAQs) and What You Must Know
- WHAT IS THIS ACT REALLY ABOUT?
At its core, this law says: If government owns a business, it must behave like a serious commercial company—not a ministry in disguise. It creates one clear ownership, governance, and performance framework for Government Owned Enterprises (GOEs), replacing the messy patchwork of old State Corporation laws .
- WHAT EXACTLY IS A GOVERNMENT-OWNED ENTERPRISE (GOE)?
A GOE is a company (not a parastatal in the old sense) that:
- Is majority-owned (over 50%) by the national government
- Operates on commercial principles
- Sells goods or services for profit
- Is not dependent on annual budget allocations to survive
- Is incorporated under the Companies Act
Bottom line: Government as shareholder, not operator. 2
- WHO IS IN CHARGE?
3.1 Ownership: National Treasury
The Cabinet Secretary for the National Treasury is the shareholder-in-chief:
- Holds government shares
- Appoints independent directors
- Signs performance contracts
- Evaluates performance
- Sets board remuneration
- Assigns public service obligations (PSOs) when needed
3.2 Policy: Sector Ministries
- Line ministries set policy, but do not run the companies. No micromanagement allowed.
- A classic OECD-style separation of ownership and regulation.
- HOW DO YOU CREATE A NEW GOE?
To create a GOE:
Ministry submits a business case must prove:
- Market failure exists
- No duplication
- Commercial viability
- Fiscal impact is manageable
- Treasury evaluates
- Cabinet approves
- Company incorporated under the Companies Act
If it doesn’t pass the spreadsheet test, it doesn’t get born. 3
- HOW ARE GOES GOVERNED?
5.1 Board structure (very deliberate):
- Chairperson (independent)
- 6 independent directors
- 1 Treasury representative
- 1 sector ministry representative
- CEO (non-voting)
5.2 Board members must:
- Have serious professional credentials
- At least 10 years’ experience
- No political party affiliation in the last 5 years
- No conflicts of interest
- Meet Chapter Six integrity standards
- CEOS: HIRED, FIRED, AND MEASURED
- CEO is competitively recruited
- Appointed by the Board (not politicians)
- 3-year term, renewable once
- Can be removed for poor performance or misconduct
- Reports to the Board, not the Ministry
- PERFORMANCE IS NON-NEGOTIABLE
Every GOE must:
- Have a strategic plan
- Prepare an annual business plan
- Sign a performance contract with Treasury
- Be evaluated annually using audited financials
If you miss targets, consequences follow—especially for boards.
- PUBLIC SERVICE OBLIGATIONS (PSOS):
This is big.
If government wants a GOE to:
- Subsidise services
- Serve remote areas
- Do “national duty” work that loses money
Then:
- PSOs must be approved by Cabinet
- Costed separately
- Funded from the budget
- Audited separately
- Time-bound
No more hiding losses under “social mandate” excuses.
- TRANSPARENCY IS MANDATORY
GOEs must publish:
- Audited annual reports
- Performance evaluation results
- Anti-corruption reports
Treasury must publish:
- Performance rankings
- Director appointment processes
Sunlight is the new accountability tool. 5
- MASSIVE STRUCTURAL CHANGE: OLD LAWS REPEALED
Dozens of old Acts are repealed:
- Kenya Ports Authority Act
- Kenya Railways Act
- KAA Act
- KICC Act
- NCPB Act
- AFC Act
- And many others
These entities are now public limited companies, with assets, staff, contracts, and liabilities transferred intact.
- WHO IS AFFECTED?
Over 60 entities, including:
- Kenyatta International Convention Centre (KICC)
- Kenya Power
- KenGen
- Kenya Ports Authority
- Kenya Railways
- National Oil
- Kenya Seed Company
- Consolidated Bank
- Kenya Safari Lodges & Hotels
- BIG PICTURE TAKE
This Act is:
- Pro-market
- Anti-political interference
- Board-centric
- Performance-driven
If implemented properly, it could:
- Kill loss-making excuses
- Professionalise boards
- Make PSOs honest and funded
- Turn GOEs into real value creators
If implemented badly? Same players, new letterheads.