Kenya Railways Corporation (KRC) slumped into a Sh50.37 billion deficit in the financial year that ended June 2024, topping the list of State agencies whose operational costs outstripped revenues, forcing them to continuously rely on support from the exchequer.
Disclosures by the National Treasury show that the Central Bank of Kenya (CBK) had the second largest deficit at Sh24.34 billion, while the Kenya National Trading Corporation came in third at Sh5.47 billion.
State corporations and semi-autonomous government agencies (Sagas) are grappling with rising costs that have outstripped their revenues, a situation that has forced the vast majority to rely excessively on the National Treasury for financial support to run basic operations and pay salaries.
But overall, a bigger percentage of the 528 corporations and Sagas posted higher revenues than the costs incurred in the financial year, pushing the combined surplus cash held by the entities to Sh203.38 billion from Sh145.79 billion a year earlier.
“In the financial year 2023/24, there was a significant improvement in revenue and expenditure as compared to the prior year,” the National Treasury says in the report.
KRC’s woes have been compounded by the struggles of the Madaraka Express train to break even and ensure it can self-fund its operating costs.
The Madaraka Express, which runs on the standard gauge railway, has struggled to break even since its inception in 2017, with operating costs significantly higher than the revenue from passenger and cargo trains.
Other State entities whose expenditure exceeded the revenue generated include the Social Health Authority with a deficit of Sh3.37 billion, the Kenya National Highways Authority at Sh3.23 billion, East African Portland Cement at Sh2.04 billion and the National Oil Corporation at Sh1.57 billion.
The Treasury report further shows that the government created an additional four technical and vocational education and training (Tvet) and teachers training colleges in the period under review, further increasing the financial burden on taxpayers.
Some of the entities, like KRC, continue to rely heavily on the National Treasury to run operations like the standard gauge railway, while Nock has also turned to the exchequer to pay salaries and run other day-to-day operations.
Portland Cement, Nock, and others have been teetering on the brink of liquidation for years, with mounting debt defaults and widening losses prompting the State to put some of them up for privatisation.
Nock is in the final stages of onboarding French oil marketer Rubis as a strategic investor, while a similar plan for Portland Cement, first announced in 2023, has since gone quiet.
State corporations and Sagas were initially expected to self-fund their operations and only occasionally turn to the exchequer for financial support to undertake capital-intensive projects meant for taxpayers.
The woes have also hurt the amount of surplus cash that the National Treasury mops from commercial entities for budget support amid the high debt payment obligations.
Commercial State firms, Sagas, and regulatory authorities are required to remit 90 percent of their surplus cash to the National Treasury at the end of every financial year.
Kenya Revenue Authority is the entity mandated to mop up this cash, which is then deployed to projects meant for the public and other forms of budget support.
