These firms need more than bail outs to thrive

Kenya Power workers fix a transformer at Ndimaini Village in Karatina, Nyeri.[Kibata Kihu, Standard]

Once again, the government is planning to bail out ailing parastatals. And as usual, the money will come from the exchequer.

There is no doubt that corporations such as Kenya Power and Lighting Company are strategic to the country. As such, it is critical that they get some help whenever they are in trouble. We surely shouldn’t let our only national carrier or power distributor to just go down.

However, any assistance, whether technical or financial, must not be unconditional.   

Loss-making Kenya Airways (KQ) tops in the planned Sh38.35 billion bail out unveiled on Tuesday by the Cabinet Secretary for National Treasury Ukur Yatani to support struggling State-owned enterprises.

If approved by Parliament, Treasury will release an additional Sh26.56 billion under public finance management vote mainly to support KQ. That should help the airline whose finances were battered by the Covid-19 pandemic cruise into profitability.

Also to benefit from the supplementary budget will be public universities, most which are struggling, which will get Sh8.58 billion while Sh2.99 billion will go to Kenya Power under the power transmission and distribution vote head.

Treasury’s financial evaluation conducted last year proposed that Sh383 billion be used to bridge the liquidity gap for 18 state-owned enterprises, excluding KQ, over the next five years.

There is no problem with these bail outs. But they are not enough to resuscitate these enterprises. Even as we inject more taxpayers’ money into the failing state corporations, there is need to address the initial mess that got them here. Some of these corporations are bloated. There is a need to cut the extra fat so that they can operate efficiently.

There is also need to address wastage and corruption in some of these corporations. If that is not done we will continue pumping taxpayer's money into a bottomless pit.