Parliament wants Kenya Meat Commission to sack 800 employees

The Kenya Meat Commission factory in Athi River. The meat processor is in a financial crisis due to high debts. [PHOTO: FILE/STANDARD]

Parliament wants the troubled Kenya Meat Commission to sack more than 800 employees in a bid to contain the parastatal’s high wage bill.

In a report that faults how the parastatal is run. Despite gulping billions of shillings from the taxpayers, Parliament says KMC is in a precarious financial situation and continues to rely on old machinery and a large workforce.

“The committee observed that the poor financial performance of some of the State corporations is attributable to  management ineptitude and a bloated workforce, among other factors,” the report by the Public Investment Committee (PIC), which also audited financial reports for 64 State agencies, reads in part.

The report notes KMC has more than three times the number of employees it needs. “Kenya Meat Commission (KMC), which is in a precarious financial situation continues to rely on old machinery and a large workforce of 1,165 persons against a recommended workforce of 300,” the PIC report adds. This means the parastatal has 865 staff in excess and sacking them will see it reduce its workforce by more than two thirds.

The then KMC Acting Managing Commissioner James Tendwa, who was accompanied by his senior management team including the company secretary, appeared in Parliament mid this year to adduce evidence on the audited financial statements for years 2007/2008 to 2011/2012.

The parastatal has already submitted its business revival plan to the Government, which it hopes will help raise funding to carry out the intended staff rationalisation programme as well as support its turnaround.

“This plan will among many other things require funding in order to rehabilitate the plant and bring it up to an efficient level. The funding will also be used to improve working capital and carry out staff rationalisation,” the report notes.

Parliament also found that the parastatal has been having trouble collecting its debts as well as making less provisions for bad debts.

KMC explained that its trade and other receivables balance of Sh93 million included an amount of Sh1.9 million owed by a foreign debtor, which had been outstanding for over a year.

The report noted that available information indicated there was no contractual agreement between the debtor and KMC. “However, a provision of 10 per cent of the debt made in these financial statements is considered inadequate given the fact that there was no agreement and the officers involved have since left employment. Consequently, the recoverability of the debt is doubtful,” the report said.

Mr Tendwa told the committee that the foreign debtor (Southern Sudan Meat Company) was supplied with 22 tonnes of frozen primal cut of beef in March 2007. The meat was worth Sh4.5 million and the debtor paid only Sh2.5 million in three instalments. The customer is yet to pay the balance of Sh1.9 million.

operational inefficiency

“The Commission is not able to trace the customer due to insufficient records/information. To safeguard the Commission from such incidents, there is a policy in place that export sales must be prepaid for by the customer before exporting,” the report adds.

The committee now wants KMC to liaise with the Kenyan Embassy in South Sudan to establish the existence of the South Sudan Meat Company and whether it is a private or public company and follow up on the outstanding debt.

It also wants the then managing commissioner held accountable and surcharged for loss of Sh1.9 million as a result of his negligence.

The committee was informed that during the year under review, the commission incurred a loss of Sh170 million, thereby reducing the accumulated retained earnings from Sh79 million to negative Sh91 million.

“Evidently therefore, the commission’s financial performance is precarious and if measures are not put in place to improve and reverse the trend, the commission may in the future face financial setbacks,” the report reads.

On top of its woes, KMC said that its plant was operating below capacity, at less than 30 per cent capacity, and this has brought in operational inefficiency. In addition, its cost of operation is not competitive both at local and export markets.

“Inefficient old machines have also contributed to high cost of operation and wastage, due to frequent breakdowns, power consumption and more manpower. This has forced the commission to rely on the Exchequer in order to remain afloat,” the report notes.