Act fast on moribund State corporations

Friday, July 9th, 2021 00:00 | By

That the National Treasury has embarked on an exercise to audit and rationalise Kenya’s 260 State corporations, in a cost-cutting measure, is a move in the right direction.

With the taxman hard-pressed to raise revenue to fund Kenya’s ambitious Sh3.6 trillion budget, loss-making entities are now becoming a burden to the economy and indeed taxpayers.

Kenya is between a rock and a hard place with the debt portfolio getting closer to the Sh9 trillion every day, something must give.

The Treasury must ensure the audit, which has so far evaluated 18 State corporations, continues to all others so that a rescue package is outlined for each struggling entity, and ensure the profit-making ones remain profitable.

Already, the audit reveals that an estimated Sh70 billion, which would otherwise be required to support the troubled State agencies, can be rescued annually.

By any standards, this is a lot of money given that we have a total of 260 corporations.

It is worth noting that out of the 18 State corporations targeted in the audit, only four were profitable with the remaining 14 being either unprofitable, loss making or operating below cost recovery.

These unprofitable corporations pose high fiscal risks to the government due to the large debts they owe Treasury coupled with associated repayment risks, as well as unsustainable pending bills and arrears.

This is in spite of some entities like Kenya Power and Kenya Airways having been profitable only a couple of years ago.

It is about time a lasting solution is found. Those that cannot be resuscitated must be privatised.

It will not be a walk in the park for the Treasury, and it must therefore move with speed and demand for expenditure rationalisation, call for revenue enhancement measures, and seal all revenue leakages to cushion the national purse.

The Treasury will however be hard pressed to give a solution to social service providers such as Kenyatta National Hospital, Kenya National Examinations Council, Athi Water Works Development Agency, and Kenya Wildlife Services which are operating below the cost of recovery.

Whatever it takes, these small steps are apt and could salvage what has been slowly sinking the ship.

Lastly, while these measures are part of wider calls from Bretton Woods institutions to improve the country’s fiscal vulnerabilities, it should not be a matter of ticking boxes, Treasury must borrow global best practices to cushion the economy while at it.

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