Inside Politics

Commercial state firms post measly Sh5.1 million profits

Monday, November 9th, 2020 00:00 |
Economic growth. Photo/Courtesy

Lewis Njoka @LewisNjoka

Commercial State corporations posted a paltry Sh5.1 million profit in the financial year 2019/2020 year which was a drastic drop from Sh31.7million declared the previous year, a report has revealed.

According to the National Treasury report, total profit declared by State corporations dropped by a massive Sh26.6million from Sh31.7 million in financial year 2018/2019 in what has been a downward  trend in the recent past.

“The big drop was mainly attributed to Kenya Railway Corporation that posted Sh24,178 million loss in 2019/2020 compared with Sh8,477 million loss in 2018/2019 financial year,” says the Consolidated National Government Investment Report.

The decline in profits which has been witnessed over the last three financial years, has seen the profits of commercial State corporations tumble, from a high of Sh61.9 million in 2017/2018.

According to the 2019/2020 Consolidated National Government Investment Report, internally generated revenue stood at Sh603.2 million down from Sh625.3 million in the 2018/19 financial year. 

Marginal drop

“The marginal drop was attributed to the impact of Covid-19 in the last quarter of  2019/2020 financial year,” the report says.

Total transfers and subsidies to State corporations in 2019/2020 stood at Sh532.2 million which included Sh239.6 million for recurrent and Sh292.7 million for development. 

During the period, loans acquired by the State corporations reduced to Sh113.6 million down from 260.4 million in 2018/2019 financial year, a reduction attributed to a lower draw-down of China Exim SGR loan. Phase 2A of the SGR was completed during that period.

Total liabilities for state corporations in FY 2019/20 stood at Sh1.2 billion with outstanding government loans at Sh928.9 million. Of this debt, Kenya Railways alone accounts for Sh539.3 million.

Poor performance

The unimposing performance by state corporations comes at a time when the Nairobi Securities Exchange (NSE) seeks to tap state corporations as a way to boost their performance and end the listing dry spell at the Nairobi bourse.

In a recent interview with Business Hub, NSE chairman Kiprono Kittony said the exchange was in talks with the Cabinet Secretary Treasury to have the government list about 30 per cent of its holding in various state corporations at the  bourse.

“It is our belief that we are able to raise up to Sh230 billion shillings for the government if they were to draw down further shareholding.

You know the government still owns substantial shares in companies like Kengen, Safaricom, Kenya Pipeline, Kenya Airports Authority, Kenya Ports Authority, all of these that are within their purview and ownership. It would create a lot of vibrancy in the market,” Kittony said.

Among the state corporations the NSE is eyeing include Kenya Electricity Transmission Company (Ketraco), the Geothermal Development Company (GDC), Kenya Seed Company, and Agricultural Development Corporation. 

In 2013, a presidential taskforce recommended that some state corporations be merged.

This saw Brand Kenya and the Export Promotion Council merged to form the Kenya Export Promotion and Branding Agency (Keproba).

Efforts to merge other State corporations, according to the Treasury report, are ongoing, albeit slowly.

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