This archive report was first published on 14 July 2021.
On July 14, 2021, the National Treasury revealed that 18 state-owned enterprises in Kenya are facing a significant financial crisis, with liabilities exceeding assets totaling KSh 382 billion over the next five years.
State-Owned Enterprises in Financial Crisis ¶
The National Treasury grouped the state-owned enterprises into three categories: profitable service providers, unprofitable and highly indebted entities, and insolvent wholly or partly owned state enterprises.
Profitable service providers include Kenya Ports Authority, Kenya Pipeline Company, Kenya Airports Authority, and Kenya Electricity Generating Company (KenGen), which regularly pay dividends and taxes and are the primary revenue earners in the state-owned enterprises sector.
On the other hand, Kenya Power and Lighting Company and Kenya Railways are listed as unprofitable, highly indebted, and facing acute liquidity challenges.
Insolvent wholly or partly owned state enterprises include Kenya Broadcasting Corporation, East African Portland Cement Company, Postal Corporation of Kenya, and Kenya Post Office Savings Bank, which have lost market share and generated hefty tax and social security arrears.
These state-owned enterprises are heavily dependent on state transfers despite their significant role in delivering core services.
According to Ukur Yatani, Cabinet Secretary, National Treasury and Planning, a multi-faceted effort is required to address the financial challenges facing state corporations, including possible reforms and restructuring through expenditure rationalization, revenue-enhancing measures, and sealing revenue leakages to minimize financial support from the Exchequer.
