NAIROBI, Kenya – The National Assembly passed three consequential economic bills on Tuesday, 18 November 2025, in a significant legislative push to overhaul the governance of state-owned enterprises, ensure tax collection complies with court directives, and boost investment in the capital markets. The passage of the Government Owned Enterprises Bill, 2024, the Provisional Collection of Taxes and Duties (Repeal) Bill, 2025, and the Capital Markets (Amendment) Bill, 2025, marks a critical moment in the government's agenda to stabilize public finances and enhance the investment climate. The bills now await presidential assent to become law.

Overhauling State-Owned Enterprises

The centerpiece of the legislative package, the Government Owned Enterprises (GOE) Bill, 2024, is designed to introduce sweeping reforms to Kenya's often inefficient and loss-making parastatals. The new law establishes a comprehensive framework for the creation, governance, and performance management of all commercial state-owned entities. A key provision of the bill is to mandate greater transparency, requiring GOEs to publicly disclose audited annual reports, performance evaluations, and anti-corruption activities on their websites or other accessible platforms. This aims to address long-standing issues of financial mismanagement and corruption that have plagued entities like Kenya Pipeline Company (KPC) and the National Health Insurance Fund (NHIF).

Furthermore, the legislation seeks to professionalize the leadership of these critical state firms by introducing a merit-based and competitive recruitment process for directors, supervised by an independent selection panel. The bill explicitly bars individuals with political affiliations in the preceding five years from being appointed as independent directors, a move intended to curb political patronage and cronyism that have historically hampered the performance of parastatals. By enforcing stricter governance and accountability, the government aims to reduce the fiscal drain on the exchequer and potentially attract private investment into these enterprises.

Aligning Taxation with the Constitution

The second piece of legislation, the Provisional Collection of Taxes and Duties (Repeal) Bill, 2025, addresses a legal loophole that has created uncertainty for taxpayers. The bill formally repeals an old Act (Cap. 415) that the High Court declared unconstitutional in 2018 following a petition by activist Okiya Omtatah. The now-repealed law had allowed the Kenya Revenue Authority (KRA) to begin collecting taxes immediately after the budget statement was read, even before the corresponding Finance Act was passed by Parliament and assented to by the President.

The High Court found this practice unconstitutional, creating legal ambiguity. By passing the repeal bill, which was sponsored by Majority Leader Kimani Ichung'wah, the National Assembly has cleaned up the statute books and ensured that all tax collection mechanisms are aligned with the Constitution and court rulings. This move is expected to provide legal certainty for taxpayers and prevent future legal challenges against the tax authority.

Stimulating Capital Markets

The third bill passed was the Capital Markets (Amendment) Bill, 2025, which amends the Capital Markets Act (Cap. 485A). The primary goal of this amendment is to enhance the ease of doing business and attract more significant investment into regulated financial institutions by removing restrictive shareholding limits. According to a statement from the National Assembly, the removal of these limits is expected to encourage larger investors to inject substantial capital, thereby increasing liquidity and creating expansion opportunities for institutions operating within Kenya's capital markets. This is part of a broader strategy to deepen the country's financial markets and position Nairobi as a competitive international financial hub.

Implications for Kenya's Economy

Together, these three bills represent a concerted effort by the government to address structural weaknesses in the Kenyan economy. The reforms targeting state-owned enterprises are particularly crucial, as these entities play a significant role in key sectors but have often been a burden on public funds. Improved governance and efficiency could transform them into valuable contributors to national development.

The tax-related legislation reinforces the rule of law and predictability in the tax system, which is fundamental for both local businesses and foreign investors. For the capital markets, the amendments signal a move towards greater liberalization, aimed at attracting the foreign direct investment needed to fuel economic growth. As these bills move to the final stage of presidential assent, their implementation will be closely watched by the business community, investors, and the Kenyan public for their potential to foster a more transparent, efficient, and robust economic environment.