While State corporations are not, and should not be, profit making enterprises they should always aim for a surplus at the end of the financial year.
Registering a profit or surplus for a State corporation is a sign of efficient utilisation of funds, including taxpayers’ money that most parastatals receive every fiscal year. Read More
Covid 19 Time Series
So what has the financial performance of State corporations been like? Unfortunately, not many of the firms have passed the test of financial prudency.
A new report by the National Treasury tabled at the National Assembly on Thursday shows that slightly over half of the parastatals have run into losses, or deficits in case of non-commercial entities.
The Consolidated National Government Investment Report for the 2019-20 financial year shows that out of 247 State corporations, 127 made either losses or deficits.
National Treasury Cabinet Secretary Ukur Yatani blamed this on the adverse effects of the Covid-19 pandemic. The pandemic has gutted revenues for most of the corporations.
The biggest loss-maker during this period was Kenya Railways Corporation (KRC), whose losses almost tripled from Sh8.47 billion in 2019 to Sh24.2 billion last year.
During the first six months of this year, passenger services offered by the Standard Gauge Railway (SGR), which is under the management of KRC, were disrupted after the Government restricted movement into four counties, including Nairobi and Mombasa.
The SGR plies the Nairobi-Mombasa route.
Following the KRC loss, the overall profitability of commercial State corporations dropped by 91 per cent to Sh5.1 billion.“The big drop was mainly attributed to Kenya Railways Corporation,” said Mr Yatani.Other State firms that did not perform well during this period include Kenya Broadcasting Corporation (KBC), which made a deficit of Sh9.8 billion.It was followed by Nzoia Sugar with loss of Sh3.48 billion. Most local sugar millers have been struggling, with plans in place for most of them to be privatised. Kenya Power was also among the poor performers in an energy sector that largely posted good results.The company made a loss of Sh3 billion during the year, attributing it to the adverse effects of stringent containment measures implemented by the government to curb the spread of Covid-19.Kenya Power, which is listed on the Nairobi Securities Exchange with the government holding a significant stake in the power distributor, received about Sh2 billion as development grants from the exchequer.By virtue of being a commercial State entity, the money was to be used for […]