A new directive from the National Treasury now requires government institutions at both national and county levels to turn idle and underused public assets into revenue-generating ventures, as part of efforts to ease pressure on public finances and improve efficiency.
The guidance, issued in a circular dated February 12, 2026, follows internal assessments that exposed gaps in how public assets are managed, including poor maintenance, duplication of resources and weak long-term planning across several institutions.
Treasury Cabinet Secretary John Mbadi said the government has spent heavily over the years to acquire and run public assets aimed at improving services and supporting economic development, but many are not delivering expected returns.
“These inefficiencies result in avoidable fiscal pressures, increased recurrent expenditure and undermine government fiscal consolidation objectives and public financial management reforms,” reads the circular.
The circular sets out clear instructions to Ministries, Departments and Agencies as well as county governments on how to properly manage assets from acquisition to disposal, with a focus on ensuring they generate value and support service delivery.
It applies to all public entities and covers assets owned or controlled by the government, whether directly or indirectly.
Principal Secretaries and accounting officers have been directed to carry out a full inventory of idle or underused public land under their control. The exercise must be supported by valid ownership records and updated asset registers.
They are also required to have the land valued by registered government valuers and identify viable ways to generate income from it.
Among the proposed approaches are “leasing arrangements, Public Private Partnerships (PPPs), joint ventures, where legally permitted, licensing and user rights and development rights, subject to planning approvals.”
The Treasury has made it clear that any commercialisation must follow the law, including procurement procedures, approvals from the National Land Commission where necessary, and compliance with environmental and planning requirements.
All institutions must incorporate the plans into their Asset Management Plans and submit reports within 90 days outlining the assets identified, how they will be commercialised and timelines for implementation.
The directive also seeks to address inefficiencies in the use of office space. Government entities have been told to align space allocation with approved standards and eliminate unused or excess space.
“No public institution shall lease or rent office space where suitable government-owned space is available and unutilised,” the Treasury said.
Mbadi said leasing office space will only be permitted after approval and must be supported by proof that no government premises are available. Such requests must be cleared by the State Department of Housing and Urban Development and reported to the Treasury.
The circular further requires that government residential houses be rented out at rates that reflect the market, with reviews conducted regularly, at least once every five years.
Institutions have also been encouraged to share facilities, bring related services under one roof and prioritise owning office space instead of relying on long-term rentals, based on proper cost analysis.
Principal Secretaries must review how buildings are currently being used and file compliance reports within the set 90-day timeline.
Beyond buildings and land, the Treasury has directed road agencies and county governments to generate income from road reserves and corridors through approved activities such as utility wayleaves, advertising, concessions, tolling and temporary use of surplus land.
They may also adopt digital and smart infrastructure projects along transport corridors, provided all legal, safety and planning standards are met. Updated asset records and revenue reports are required within the same reporting period.
Railway assets have also been earmarked for commercial use, including “passenger and freight concessions, leasing of railway land and stations, way-leaves, and tourism services,” while maintaining public ownership.
Government transport resources are expected to be used more efficiently through shared fleets, leasing or charter arrangements where allowed, managed services and advertising, without affecting essential services or security.
Training centres and conference facilities owned by the government are also to be opened up for income generation through leasing, hosting events, partnerships and management contracts, with proper systems to account for revenue.
The circular also addresses the management of government vehicles, directing agencies to reduce idle units, encourage shared use and base procurement and replacement decisions on data.
Vehicle maintenance should prioritise workshops run by National Polytechnics and TVET institutions within a 40-kilometre radius, unless the vehicles are still under warranty. Those that are no longer in use may be transferred to these institutions to support training, in line with disposal rules.
The Treasury added that surplus assets should be redistributed to areas where they are needed most to improve overall efficiency.
Principal Secretaries and accounting officers have been tasked with ensuring full implementation of the directive and submitting accurate reports within the stipulated timelines.
“The National Treasury shall be available for any clarifications on this Circular. Strict adherence to this Circular is essential to enhance efficiency in public service delivery, promote prudent stewardship of public assets, and safeguard public resources,” reads the circular.
The directive is grounded in the Constitution of Kenya 2010, particularly Articles 201 and 227 on responsible use of public resources, as well as the Public Finance Management Act 2012 and the Public Procurement and Asset Disposal Act 2015.
It also aligns with the National Asset and Liability Management Policy, Treasury regulations and International Public Sector Accounting Standards.
“All Ministries, Departments and Agencies (MDAs) and county governments are required to ensure full compliance with the above legal and policy instruments,” Mbadi said.