The loss-making State firms that are milking taxpayers dry

In the next five years, taxpayers in Kenya will be funneling roughly Kes70 billion per annum to give 18 parastatals that are in dire straits a lifeline.

Over the period, Kenyans will have paid at least Kes 382 billion to among others the Kenya Broadcasting Corporation, East Africa Portland Cement, Postal Corporation of Kenya as well as the Kenya Post Office Savings Bank which are firmly in the red as per the latest report on the financial health of State Corporations by the Treasury.

The four parastatals “have lost market share to effectively compete and have generated large tax and social security arrears,” the statement signed by the Treasury Cabinet Secretary Ukur Yatani said.

To help plug the financing gap, the Treasury is mulling some measures to boost revenue generation while putting the entities’ spending on short leash.

The country’s biggest institutions of higher learning; The University of Nairobi, Jomo Kenyatta University of Agriculture and Technology (JKUAT), Moi and Kenyatta universities are currently running “below cost recovery,” the report notes adding that they face mounting arrears and they heavily rely on the government financing to deliver services.

Read also: Pandemic sets stage for IMF-led reforms in Kenya’s state owned enterprises

“The National Treasury is reviewing the business models and operating environment of these State Corporations, with the possibility of proposing solutions such as a combination of new borrowings and expenditure rationalization,” said Mr Yatani.

The report also said that Kenyatta National Hospital, the Kenya National Examinations Council, Athi Water Works Development Agency as well as the Kenya Wildlife Service are operating below cost recovery though they have strong mandate to deliver key social services to the public.

Debt-saddled Kenya Power & Lighting Company and Kenya Railways Corporation are “unprofitable” as they are grappling with acute liquidity challenges.

Nudged by the International Monetary Fund (IMF) as a precondition for accessing Kes 255 billion loan in April, Kenya agreed to evaluate the financial health of her State institutions following economic disruptions caused by the pandemic.

The Treasury, however, promises to infuse reforms by among others strengthening the legal framework and institutional structures of parastatals while also stepping up monitoring controls to boost transparency.

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