The country faces a fiscal risk from struggling state-owned entities, three of which have been operating at losses raising questions over their sustainability.
The companies; Rivatex, Postal Corporation of Kenya (PCK), and the National Environment Management Authority (Nema) have been flagged by the Auditor-General for posting losses.
In a report by the Public Investments Committee, Rivatex East Africa’s financial status had been dwindling since 2015.
According to the report, by 2016, Rivatex had accrued Sh1.02 billion in losses.
“It recorded a turnover of Sh98,172,058 during the year 2015/16 as compared to Sh118,425,640 during the year 2014/15 a decrease of approximately 17.1 per cent. Net loss increased from Sh109,178,538 in 2014/2015 to Sh132,543,477, which was approximately 17.6 per cent to bring the accumulated losses to Sh1,020,603,854. Though there has been a slight improvement in the year 2019, the entity was massively dependent on government support to operate,” the report states.
The report also states that Nema’s financial woes have stemmed from the scrapping of the Environmental Impact Assessment levy on all construction projects in 2016.
“In the financial year 2017/2018, Nema had a negative working capital of Sh19.6 million, and the trend has continued to the subsequent financial year with the authority making a loss of Sh78 million in the financial year 2019/2020 thereby affecting operations of the authority due to budget deficit,” read the report.
On PCK, the firm has been facing a worsening business environment in the past decade.
Further, cash flow challenges have affected [non-discretionary] expenditure such as payment of salary.
“The continued sustainability of the corporation is at risk unless drastic measures are put in place to make it afloat,” the reports say.
This year, the PCK will be marking 21 years since splitting from the parent organization Kenya Posts and Telecommunication Corporation, which also saw the creation of Telkom Kenya and the Communications Authority.
However, workers at Posta, as it is known by its brand name, have very little to celebrate.
Last year December, workers staged a sit-in to protest the alleged non-payment of salaries and aired other issues affecting them.
The board of directors at Posta have also come under fire for allegedly failing to provide oversight and direction and the union is now calling for its dissolution.
Out of the 623 post offices owned by Posta, nearly 250 cannot make enough money to sustain their operations.