NAIROBI, Kenya – Treasury Cabinet Secretary John Mbadi has raised concern over the increasing tendency of state agencies to operate like investment firms, warning that many have abandoned their core service delivery roles in favour of profit-making activities.
Appearing before the Senate Standing Committee on Devolution and Intergovernmental Relations, Mbadi singled out agencies investing in government securities using public funds, saying the practice undermines their purpose and shortchanges citizens.
“It is disturbing to see state corporations that are supposed to deliver services opting to divert resources to treasury bonds. That is not their job,” said Mbadi. “We must restore focus to their actual mandates.”
UFAA Under Fire
Mbadi cited the Unclaimed Financial Assets Authority (UFAA) as a key example of mission drift. He criticized the agency for prioritising returns on treasury bonds over its core function of reuniting Kenyans with dormant funds.
“People are living in poverty while their parents’ savings sit idle in accounts they don’t even know exist,” Mbadi said, adding that urgent reforms are underway at UFAA, including the recruitment of a new CEO to steer a realignment with its founding purpose.
Parastatal Reform Drive
The Treasury CS also disclosed that at least 18 state agencies are under review for possible dissolution, merger, or devolution, part of a broader plan to enhance efficiency and eliminate redundancy in public service.
“Some of these institutions are liabilities. They duplicate roles, have bloated staff, and have deviated from their original purpose,” said Mbadi. “We are restructuring them—some will be dissolved, others merged, and those with devolved functions transferred to county governments.”
Water and irrigation agencies were flagged as particularly problematic due to overlapping mandates that result in waste and inefficiency.
“You find one agency in charge of water harvesting and another for irrigation. Why are they not working together? Why not consolidate them?” he posed.
Devolution Gaps and Delays
Senators pressed Mbadi and his team for updates on the parastatal reform roadmap, including how devolved functions will be financed.
Marsabit Senator Mohamed Chute and Kisii Senator Richard Onyonka both voiced concern over the slow pace of reforms and legal ambiguity around devolved mandates.
Mbadi said the Intergovernmental Relations Technical Committee (IGRTC) is finalising a costing exercise, after which resources will be allocated to counties.
The earliest funding shift is expected in the 2026/27 financial year, he said.
“We have identified which functions to devolve, but the funding will only come after a proper costing exercise is complete,” Mbadi explained.
The government has maintained that all parastatals must justify their existence based on performance, efficiency, and relevance. Those failing to meet the bar will face radical restructuring.
