This archive report was first published on 22 August 2020.
On August 22, 2020, National Treasury Cabinet Secretary Ukur Yatani outlined plans to increase financial returns from three state corporations whose operations were recently merged. The corporations, Kenya Railways Corporation, Kenya Pipeline Company, and Kenya Ports Authority, are now under the Industrial and Commercial Development Corporation (ICDC).
According to Yatani, the assets of the three corporations, valued at Sh1.2 trillion, must be 'sweated more to give the required financial and economic return.' Most of the investments are funded through debt, and Yatani aims to weed out mismanagement in the respective agencies.
Yatani emphasized the need for improved corporate governance in the corporations, stating, 'In order to reap the dividend, corporate governance in the four corporations must be improved.'
The three corporations had a cumulative turnover of Sh600 billion in the last three financial years, which should be sufficient to cover their operating costs and return a profit, Yatani noted.
Kenya Railways Corporation has been largely dependent on taxpayers for survival, with the government providing up to Sh1 billion a month in funds for the Sh500 billion Standard Gauge Railway project. However, a decision by China to suspend additional loans to complete the Naivasha-Malaba line has complicated the prospects of the new railway.
Yatani anticipates that the synergies of the three corporations under the ICDC will be sufficient to more than cover the operational costs of the railway project, which was recently declared illegal for flouting procurement laws.
He stated, 'The National Treasury will support ICDC to ensure that systems are overhauled and internal controls reviewed to eradicate conflicts of interest, opportunity for fraud and mismanagement.'
