Treasury Hunts for Funds to Settle Parastatal Staff as Mergers Loom
The National Treasury is scrambling to secure funds to pay off public workers set to retire or face redundancy as the government moves to merge and dissolve dozens of State-owned corporations.
The restructuring plan—set to slash 42 agencies into 20 and dissolve 9 others—aims to cut the public wage bill and boost efficiency.
But behind the reforms is a ticking financial time bomb: severance pay, pension liabilities, and the political cost of job losses.
Although the government has promised to reabsorb affected employees into the civil service, fears of forced redundancies are growing, especially with budget constraints and weak institutional absorption capacity.
Under Kenyan law, redundant staff are entitled to 15 days’ pay per year worked, notice pay, and accrued leave—all of which could push the compensation bill into the billions of shillings.
As the Treasury tightens its belt amid rising debt and fiscal pressure, this wave of restructuring could test both the financial discipline and political will behind Kenya’s parastatal reform agenda.
