For decades, some State firms have become financial black holes draining taxpayers’ money. Their creation was noble but along the way, especially after liberalisation of the Kenyan economy in the 1970s, they were unable to fight irrelevance.
They were also stages for grand theft ruined by a deadly mix of debt and politics. And their terrible state has even rendered them untouchable to private investors.
Their equipment has become obsolete, vandalised and other assets such as land lost to irregular sales. ?Notable cases include the Kenya Meat Commission (KMC), some sugar millers, manufacturers and agricultural corporations.
Kenya’s taxpayers have been forced to shoulder the burden of bailing out such corporations. A 2018 investigation by The Standard showed that 10 struggling parastatals ate up Sh14 billion of taxpayers’ money in the previous financial year.
The lost funds are at the expense of funding to critical sectors such as health.
- 1 EACC recovers Sh6.2 billion public assets countrywide
- 2 Cane farmers ask MPs not to reject new sugar reforms
- 3 Brace for second locust wave- CS Munya warns
- 4 KMC clears farmers’ debt after military take over
Now, the buzz is on KMC, which has been placed in the hands of the military, who in a few days will take over hoping to bring discipline and turn it around. KMC has collapsed twice. The government wrote off billions of its debts, with the Ministry of Defence at one point being one of its biggest debtors. A 2017 audit on its finances by former Auditor General Edward Ouko wondered how it even stayed alive. Due to poor record keeping, Ouko couldn’t confirm and verify the sums of money received or banked, and income records maintained in the year under review. He added that most of the records on the ownership and value of KMC’s more than Sh1.9 billion assets could not be confirmed.
Some of its prime land was also irregularly sold. The military takeover means government has rescinded an earlier decision to sell KMC to a private investor.
In reforms, Kenya Pipeline, East African Portland Cement, National Bank of Kenya, Consolidated Bank of Kenya, KMC, Development Bank of Kenya, and five sugar millers — Chemelil, Sony, Nzoia, Miwani and Muhoroni - are among the 26 firms the State put up for sale owing to their loss making. The money that has gone into the revival of these companies could be used in more deserving sectors of the economy. It may be time the government left some of these institutions to just die.