The passage of the Government Owned Enterprises Act, 2025, represents one of the most significant shifts in Kenya’s public sector management in decades. Hidden within the technical language of the Third Schedule is a provision that should concern every Kenyan who relies on the efficiency of our ports and railways: the Kenya Ports Authority Act and the Kenya Railways Corporation Act are both set for repeal.<\/p>\n
One must appreciate that this is not merely a legal technicality, but rather a fundamental restructuring of how these critical institutions will operate. The amendments will have profound implications for our economic future.<\/p>\n
For too long, KPA and Kenya Railways have existed in a strange limbo. They have been expected to function as commercial entities while being structured as government departments. The result has been predictable: inefficiency, political interference, and a perpetual reliance on taxpayer bailouts.<\/p>\n
The Port of Mombasa is the gateway for East Africa, handling millions of tons of cargo annually, yet it has struggled with chronic congestion and operational bottlenecks. The Kenya Railways Corporation, despite the immense investment in the Standard Gauge Railway, has faced questions about its financial sustainability and management. These institutions have been too important to fail, but their legal structure has made it nearly impossible for them to succeed.<\/p>\n
The GOE Act changes this by removing them entirely from the State Corporations Act framework and reincorporating them as public limited liability companies under the Companies Act. This is not a rebranding exercise. It is a legal transformation that imposes commercial discipline where previously there was bureaucratic inertia.<\/p>\n
When an entity is governed by the Companies Act, it must answer to its shareholders. It must produce audited accounts. It must justify losses. It must, ultimately, either become profitable or face consequences.<\/p>\n
The importance of this development becomes even clearer when we examine similar transformations across the world. In the Global South, India is currently undertaking an almost identical reform.<\/p>\n
The Indian government has set a December 2026 deadline to corporatize eleven of its twelve major state-owned ports, transitioning them from “port authorities” governed by special legislation to corporate entities registered under the Companies Act. Only Kamarajar Port near Chennai currently operates as a company, and its success has become the model for the entire system.<\/p>\n
Indian policymakers argue that corporatization enhances operational efficiency, enables faster commercially driven decision-making, and grants ports the financial flexibility to raise funds independently and attract private investment. This is precisely the logic underpinning Kenya’s reforms.<\/p>\n
Further south, Uganda’s National Water and Sewerage Corporation offers another compelling example from our own region. Once a struggling, broken utility with limited coverage and poor financial sustainability, NWSC underwent fundamental institutional reforms that transformed it into a high-performing public enterprise.<\/p>\n
Today, it operates in over 287 towns, up from just 23 in 2013, serving more than 22 million people with an annual turnover that has grown nearly fourfold over the last decade. The cornerstone of this transformation was the introduction of incentive-based performance management contracts that established clear accountability at every level of the organization.<\/p>\n
As NWSC’s Managing Director noted, “Engineering builds systems, but service delivery builds trust” . The lesson is clear: proper governance structures and commercial discipline can transform public enterprises without privatizing them.<\/p>\n
Singapore provides perhaps the most sophisticated model from the Global South. Since 1974, the city-state has managed its state-owned enterprises through Temasek Holdings, a state-owned investment company that holds shares in various government-linked companies on behalf of the government.<\/p>\n
Crucially, these enterprises are incorporated under Singapore’s Companies Act as private companies rather than traditional state entities, shielding them from the overregulation and political interference that plagues public enterprises elsewhere. Temasek’s board provides strategic direction and ensures accountability while maintaining operational autonomy, creating a buffer between politicians and company management.<\/p>\n
Today, Singapore’s state-linked companies often outperform even top-tier private firms listed on the Singapore Stock Exchange. This is the destination toward which Kenya’s GOE Act is pointed.<\/p>\n
Yet we must also heed the cautionary tales. Malaysia’s experience with railway reform demonstrates how badly such transitions can go wrong. In the 1990s, Malaysia cloned the British rail privatisation model, separating train operations from infrastructure ownership.<\/p>\n
Keretapi Tanah Melayu Berhad became the train operator while a separate Railway Asset Corporation retained ownership of tracks, stations, and rolling stock. The result has been disastrous: stagnating passenger services, ageing equipment, governance gridlock, and a freight sector handling less than three percent of peninsular Malaysia’s cargo movements.<\/p>\n
The British themselves have spent three decades proving this model does not work and are now re-nationalizing key parts of their network under Great British Railways. The lesson for Kenya is that corporatization must be carefully designed. Separation of operations from infrastructure can create paralysis rather than efficiency.<\/p>\n
Greenland’s government-owned utility company, Nukissiorfiit, offers a contrasting Northern success story. Operating in one of the most challenging environments on earth\u2014a territory the size of Western Europe with only 56,000 people, mostly covered by ice\u2014this state-owned enterprise has achieved what many private utilities cannot.<\/p>\n
It already generates 72 percent of its power from renewables, aims for 100 percent by 2030, and provides electricity and water at one-third the cost of comparable areas in Canada, all without government subsidies.<\/p>\n
The company achieved this through aggressive digital transformation, moving from rigid annual budgeting to AI-driven rolling forecasts that reduced its planning team from seventy people to just nine while dramatically improving accuracy. This demonstrates that state ownership, properly structured with commercial discipline and modern management tools, can deliver world-class results.<\/p>\n
Norway, too, offers valuable insights. When the Norwegian state partially privatized and publicly listed Telenor and Statoil in 2000 and 2001, it became the largest owner on the Oslo stock exchange. Rather than retreating from ownership, Norway professionalized it, developing a governance model that treats the state as a professional investor focused on long-term value creation while insulating companies from day-to-day political interference.<\/p>\n
The sole political justification for continued state ownership became the retention of corporate headquarters within Norway, recognizing the broader economic benefits these headquarters generate for the national economy. This approach has allowed Norway to maintain strategic control over key enterprises while subjecting them to market discipline.<\/p>\n
The relevance to Kenya is unmistakable. We are not embarking on some untested experiment. We are joining a global movement toward more professional, commercially disciplined management of state enterprises. From India’s ports to Uganda’s water utility, from Singapore’s investment holding company to Greenland’s digitally transformed utility, the evidence is overwhelming that corporatization under company law, combined with professional governance and clear accountability, delivers better outcomes than the old parastatal model.<\/p>\n
The transition will be complex. Assets must be valued and transferred. Staff must adjust to new employment structures. There is a real danger that the new companies simply replicate old inefficiencies under a different legal veneer. Yet the direction of travel is correct. Our ports and railways are too vital to our national prosperity to be managed by structures designed for a different era.<\/p>\n
The GOE Act offers a path to something better: commercially disciplined, professionally managed, and genuinely accountable institutions. The repeal of the old Acts is not an ending but a beginning. The hard work of transformation now lies ahead, and we must draw on the lessons of those who have walked this path before us.<\/p>\n
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