NAIROBI, Kenya – The government has imposed a freeze on hiring, contract renewals, and pay reviews across 42 state corporations earmarked for merger or dissolution—leaving thousands of workers, including senior executives, in job limbo.
In a directive issued Monday, Chief of Staff and Head of Public Service Felix Koskei ordered an immediate halt to all recruitment, capital projects, and personnel-related policy changes within the affected agencies.
The moratorium applies to all cadres of staff and is part of President William Ruto’s broader plan to overhaul Kenya’s sprawling and underperforming parastatal sector.
“A moratorium is issued on the recruitment and renewal of contracts for chief executive officers or any other officers serving on contract terms at the lapse of their current tenure,” Koskei said in the memo.
The move could affect more than 3,000 public workers, with many already serving under short-term contracts.
The government adopted a performance-based contracting model five years ago in an effort to cut costs and improve service delivery.
Koskei’s memo also suspended any changes to salary structures and employee benefits and put on hold the approval or rollout of any new human resource policies.
The directive further bars state agencies from initiating capital projects during the transition period.
The hiring freeze comes in the wake of a January Cabinet decision to merge, dissolve, or realign dozens of parastatals in what is being billed as the largest state corporation reform effort in over a decade.
Under the plan:
- 42 agencies will be collapsed into 20 entities through mergers.
- 25 corporations will be dissolved, with their functions absorbed by ministries or existing state bodies.
- 13 professional organizations will be delisted from their current classification as state corporations.
Among the high-profile mergers is the consolidation of the Kenya Urban Roads Authority and the Kenya Rural Roads Authority into a unified national roads management agency.
The government is also merging three water regulators into a single oversight body.
Additionally, the Uwezo Fund, Women Enterprise Fund, and Youth Enterprise Fund will now operate under one financing agency, while the Kenya National Trading Corporation has been merged with the National Cereals and Produce Board.
Koskei’s memo also reveals that four government funds have been returned to their parent ministries, and six agencies have been slated for mandate alignment—a euphemism for role rationalization or potential closure.
The restructuring drive is part of Ruto’s wider agenda to streamline public spending, boost efficiency, and curb duplication of roles in government institutions.
But critics warn the reforms could leave hundreds jobless or in protracted legal battles over contract terminations.
The Treasury is also eyeing Sh42 billion in surplus funds from parastatals to plug budget shortfalls, further intensifying pressure on the state corporation network to become leaner and more productive.
Koskei emphasized that all affected corporations must comply with the directive with immediate effect, as the government accelerates implementation of the Cabinet-approved rationalization plan.
