Kenya Treasury: Idle Asset Disposal Deadline Set for 2026

• Kenya's National Treasury has directed public entities to identify and dispose of obsolete, idle, or excess assets.
• Treasury Cabinet Secretary John Mbadi issued the circular, emphasizing compliance with the Public Procurement and Asset Disposal Act, 2015.
• Public entities must submit reports on their disposal status to the Public Procurement Regulatory Authority by December 31, 2026.
• The directive aims to curb increased costs, resource wastage, and accountability risks associated with retaining unused assets.
• Public entities are encouraged to investigate causes of asset obsolescence and utilize digital platforms for improved asset management.

The continued retention of assets no longer in use leads to further deterioration, a significant loss of value, and increased expenditures related to storage and maintenance.

The National Treasury in Kenya has issued a comprehensive directive requiring all public entities to identify and subsequently dispose of assets deemed obsolete, idle, or in excess of operational needs. This instruction, conveyed through a circular by Treasury Cabinet Secretary John Mbadi, underscores the government's concern over the financial burden and potential waste associated with retaining non-performing assets.

The directive specifically targets accounting officers and heads of public entities, tasking them with overseeing this critical exercise. While the disposal of these assets is expected to commence promptly, public entities have been granted a deadline of December 31, 2026, to submit detailed reports on the status of their disposal efforts. These reports must be filed with the Public Procurement Regulatory Authority (PPRA), with a duplicate copy provided to the Treasury itself.

The Treasury's mandate is firmly rooted in the Public Procurement and Asset Disposal Act, 2015, which provides the legal framework for such processes. Cabinet Secretary Mbadi highlighted that the continued retention of assets no longer in use leads to further deterioration, a significant loss of value, and increased expenditures related to storage and maintenance. Beyond the direct financial implications, keeping these assets can also contribute to congestion within facilities, raise security concerns, and create accountability risks for public officials.

To mitigate these issues, the directive emphasizes the importance of completing asset disposal plans within the current financial year, thereby preventing them from being carried forward into subsequent periods. The Treasury, in collaboration with the PPRA and other relevant oversight bodies, will actively monitor compliance with these new requirements. This collaborative oversight aims to ensure that public entities adhere to the stipulated guidelines and timelines, reinforcing sound financial management practices across the public sector.

Beyond the immediate disposal task, the directive also calls for a deeper examination into the root causes of asset obsolescence or surplus accumulation. Cabinet Secretary Mbadi urged public entities to investigate why assets become redundant and to implement preventative measures to avoid unnecessary future accumulation. This proactive approach is designed to foster more efficient asset management practices from the outset.

Furthermore, the Treasury has advocated for the adoption of digital platforms to enhance the tracking and reporting of public assets. This technological integration is expected to improve transparency and efficiency in asset management. A key component of the directive is the emphasis on ensuring that all officers responsible for managing and disposing of public assets fully comprehend their legal obligations and are held accountable for their actions, thereby strengthening overall governance and reducing the potential for misuse or neglect of public resources.

Lawyers advising Kenyan public entities or compliance officers within them must ensure their organizations identify, dispose of, and report on obsolete or idle assets by December 31, 2026, in compliance with the Treasury's directive and the Public Procurement and Asset Disposal Act, 2015, to mitigate risks and avoid accountability issues.

Source: Original reporting via Capital FM