Editorials

Ease grip on State firms

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National Treasury building. FILE PHOTO | NMG

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Summary

  • State-owned firms have suffered huge losses over the years as a result of inefficiencies and poor management, making their turnaround under the State almost impossible.
  • With dwindling revenues, the Treasury has been forced to rely on debt to finance expenditure.

The government’s reluctance to list profit-making parastatals on the Nairobi bourse to generate revenues flies in the face of sound judgment.

Stanley Kamau, Head of Public Investments at the Treasury, told the Finance and Planning committee of the National Assembly that the government can still get money from State corporations if they are properly managed hence there is no need to take the listing route.

However, State-owned firms have suffered huge losses over the years as a result of inefficiencies and poor management, making their turnaround under the State almost impossible.

With dwindling revenues, the Treasury has been forced to rely on debt to finance expenditure. The options to raise revenues are limited — more taxation, borrowing or privatisation.

Listing could help diversify and deepen the capital markets to the benefit of the public and economy, in addition to unlocking cash and easing the strain of external borrowing. It is possible to sell part of its shares such as in KenGen where it has 70 per cent stake and retain ownership.