Sh650m set aside in mini-budget for KMC layoffs, modernisation
A section of the Kenya Meat Commission plant in Athi River. It has capacity to process 1,000 large animals per day. PHOTO | FILE
What you need to know:
The Kenya Meat Commission (KMC) has obsolete plant and has been incurring high operational costs.
Sh650 million has been set aside in the mini-budget for Kenya Meat Commission (KMC), subject to the approval of Parliament, setting the stage for layoffs and an upgrade of the Athi-River based abattoir.
KMC Managing Commissioner Joseph Learamo said the money will be spend on improving the infrastructure at the ailing parastatal.
Mr Learamo said upgrading of the plant and reducing staff will cost Sh1.8 billion.
“We are going to receive Sh650 million from the government for modernisation of our plant which is underperforming due to old machineries,” said Mr Learamo.
“Inefficiency in our production line has made KMC fail to take off as expected since it’s reopening in 2006,” he said.
KMC processes 5,000 cases of corned beef per month despite having capacity to process 20,000 cases. The parastatal lacks funds to import enough packaging cans.
The company has been incurring high overheads as the number of employees remains high despite huge underutilised capacity. Workers often go for months without salary.
The Athi River based plant has capacity to process 1,000 large animals and 1,500 small stocks daily while the Mombasa plant can process 250 large stock and 500 small ones.
Mr Learamo said the firm will begin retrenching staff through a voluntary retirement deal where affected employees will be compensated. He said the wage bill is unsustainable.
“We are going to send home 150 employees in a restructuring plan aimed at cutting cost,” Mr Learamo said during an interview with the Business Daily on Thursday.
KMC reopened in 2006 after a 15-year shutdown with the government injecting billions of shillings into the plant, including paying the National Bank of Kenya Sh5.2 billion the lender had guaranteed the factory.
Plans to build a new plant were cancelled last year when it emerged that upgrading the existing one would be cheaper.
A parliamentary committee in January rejected the planned construction of a new plant costing Sh1.1 billion. A South African firm had won the tender.
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