President William Ruto has ordered all commercial State corporations to remit 80 percent of their net income to the exchequer in a fresh mop-up aimed at propping up the National Treasury coffers.
The order followed a meeting between the President and the chairpersons and chief executive officers of State corporations on Tuesday at State House Nairobi.
In addition to remitting 80 percent of profits, the President has directed that the recurrent budgets of the entities be cut by 30 percent.
Regulatory institutions have meanwhile been ordered to remit 90 percent of their surplus funds to the Treasury.
Chairpersons and CEOs of State corporations and regulatory agencies at a meeting in State House Nairobi on March 26, 2024. PHOTO | PCS
The move is aimed at reducing wasteful expenditure while easing the drain on the exchequer for budgetary support to loss-making State enterprises.
“The money some parastatals make does not belong to their boards or management. It belongs to the people of Kenya as returns on investment. We have to shut down some of those loss-making parastatals. We must end excess capacity,” President Ruto said.
The National Treasury is set to realise billions of shillings in savings if the order is implemented as more cash finds itself into State coffers while the exchequer releases slowdown.
According to data from the State corporations, semi-autonomous government agencies and public funds consolidated financial statements for the year ended June 30, 2023, the entities realised Sh196.4 billion in surpluses, a 27 percent growth from Sh143.6 billion previously.
Total revenues in the period rounded off to Sh1.4 trillion, edging out expenses marginally with the expenditure totalling Sh1.3 trillion, marking a seven percent increase from Sh1.2 trillion in the previous period.
State corporations draw the bulk of their revenues from the sale of goods and services with the balance coming from transfers and grants from ministerial and State departments, and other income.
The majority of expenditure relates to the use of goods and services, followed by compensation of employees.
The total number of State corporations, semi-autonomous government agencies, public funds, technical and vocational education and training (TVETs) and teacher training centres (TTCs) stood at 526 at the end of the 2022/23 financial year in contrast to 500 entities previously.
The presidential order to the management of State corporations on Tuesday represents a push in cash mop up by the government which began most recently in 2020 when the then Jubilee administration stepped up the collection of idle cash from State-owned enterprises to help mitigate a cash crunch that followed the onset of the Covid-19 pandemic.
President Ruto has previously ordered that all payments for public services be done through a single pay point managed by the National Treasury in a bid to hand the exchequer visibility to all government payments for better liquidity management.
