38 State corporations choking under huge inactive loans

Kenya: Scores of State corporations and agencies are choking under a Sh14.5 billion debt. As at June 2014, the Local Government Loans Authority owed the national government Sh7.5 billion, topping the list of 38 parastatals and government agencies that are heavily indebted.

According to a summary statement on outstanding loans owed by State corporations, agencies and other organisations released last week, the Government wrote off Sh94 million owed by the Local Government Loans Authority.

The Rift Valley Water Services Board had the second largest inactive debt after it was unable to repay Sh1.4 billion. On its part, the Eldoret Municipal Council, which is now under Trans Nzoia County, was unable to service the Sh1 billion it owed the taxpayer.

The statement was signed by Treasury Cabinet Secretary Henry Rotich. It is part of the annexes presented to legislators to support the spending plan of next year’s budget estimates. Also on the list of top-ten highest indebted organisations is the struggling Kenya Meat Commission (KMC), which owed the taxpayers at least Sh940 million by June 2014.

In the new financial year, the Government plans to spend an additional Sh600 million on the revival of KMC.

As part of its revival, the State hired the Kenya School of Government to undertake consultancy on the restructuring of the commission in a process that could see at least 250 employees lose their jobs.

KMC currently has 465 employees.

Also on the list of institutions struggling to repay their debt is the Pyrethrum Board of Kenya with Sh863 million in debt.

In the 2015/16 Budget estimates, Treasury has set aside Sh300 million to be channelled towards the revival of the pyrethrum sector.

written off

On its part, the Coffee Board of Kenya, which has been the biggest recipient of debt waivers, had an inactive debt portfolio of Sh752 million by the end of the last financial year.

However, Rotich has set aside Sh1 billion to write off the coffee debt, about Sh250 million more than the debt booked.

For instance, in the current financial year ending June, the Government repaid Sh233 million owed by the Coffee Board of Kenya, which was the highest debt written off by the State this year.

Kenya Industrial Estates owes Sh423 million, Moi University (Sh231 million), South Nyanza Sugar Company (Sh199 million) and Meru Central Farmers Co-operative Union Ltd (Sh188 million).

The report also shows the Government paid Sh54 million to offset the debt of South Nyanza Sugar Company Ltd, while Sh40 million was sent to Mombasa Pipeline Board.

farmers

Other institutions that had parts of their debt written off are Mumias Out-growers Company Ltd (Sh26 million), Nzoia Sugar Company (Sh23 million) and Nairobi City Council (Sh20 million). The Government appears to have given priority to institutions in the agricultural sector to receive debt write-offs.

On its part, Moi University had Sh18 million written off, Kenya Co-operative Creameries Ltd (Sh16 million) and Sh14 million was paid to service the debt of various persons engaged in agriculture. In total, Sh549 million was used to write off debts of about 21 institutions.

Rotich has also set aside an additional Sh1.2 billion to go towards the compensation of farmers in the Mwea irrigation scheme.

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