The National Treasury has sustained a freeze on new employment across all state
corporations, tightening controls on recruitment as part of a broader push to contain public
spending and stabilise the government wage bill. In a policy circular outlining expenditure priorities for the 2026–27 financial year, Treasury Cabinet Secretary John Mbadi directed that all state corporations — including public universities — must obtain approval before hiring any staff. The approval process requires concurrence from both the relevant line ministry and the National Treasury, and must be secured before recruitment is initiated.
The directive effectively extends a public sector hiring freeze that has been in place since
early 2022, when the government first introduced stringent staffing guidelines to curb the
rising cost of running state-owned entities. Under the renewed framework, even
replacement hiring arising from natural attrition such as retirement, resignation or death
will require fresh authorisation.
Treasury says the measure is intended to enforce staffing ceilings and promote
rationalisation across state corporations, which currently number about 280 and have
traditionally been among the country’s largest employers. The sustained freeze is expected
to prolong job market pressures, particularly for graduates and professionals seeking entry
into public sector employment. Beyond recruitment, the circular also places strict limits on salary reviews and other remunerative benefits for existing staff. Any adjustments must receive prior approval from the Salaries and Remuneration Commission (SRC), and corporations are required to obtain written confirmation from the Treasury on the availability of funds before engaging the commission.
The hiring controls form part of a wider austerity framework that instructs parastatals to
rationalise personnel, operational and administrative costs. Treasury has directed chief
executives to prioritise spending strictly aligned with core mandates, while significantly
scaling back non-essential expenditure such as travel, training, seminars, consultancies, legal fees, overtime and other non-core activities.
According to the Treasury, the objective is to minimise reliance on exchequer funding,
control the growth of the public wage bill and ensure long-term sustainability of personnel
costs within state corporations. The circular warns that failure to comply with the two-tier approval process will be treated as an irregularity, exposing culpable chief executives to surcharges and other punitive measures. Treasury has indicated that it may reject annual budgets submitted by entities that fail to adhere to the directives. Chief executives who authorise spending outside approved budgets risk personal financial liability, administrative sanctions and outright rejection of their institutions’ budgets. Treasury cited provisions of the State Corporations Act, which hold accounting officers personally responsible for irregular expenditure.
In addition, the Treasury has raised concern over a growing stock of pending bills and has
warned that no annual budgets will be approved without a clear and credible plan for
settling outstanding obligations. State corporations have also been cautioned against
initiating new projects before clearing existing bills. The circular further flags governance concerns in some regulatory authorities, including the deduction of capital expenditure from reported surpluses to reduce remittances to the exchequer, as well as the failure by some entities to remit statutory deductions withheld from employees. Treasury said such practices expose institutions to legal and governance risks and violate workers’ rights.
All state corporation budgets will be processed exclusively through the Government
Investments Management Information System (GIMIS), with hard copy submissions
expressly prohibited. The system has been configured to block budget submissions from
entities that fail to provide complete data, including records on pending bills, pension
liabilities and bank balances. The directive, copied to the Auditor-General, the Controller of Budget and the Inspector-General of State Corporations, underscores the government’s emphasis on fiscal discipline, transparency and strict compliance with existing financial laws.
