The government’s income from profits and dividends in the companies that it owns fell nine per cent in the year to June 2022 as the economy continued to reel from the impact of the Covid-19 pandemic.
The State earned Sh45.53 billion from the various companies that it fully or partially owns over the financial year, which was Sh4.5 billion less than the Sh49.98 billion earned over a similar period in 2021.
The collections were, however, higher than the Sh39.9 billion that the government had expected to receive over the year, according to the Budget Review and Outlook Paper (Brop) by the National Treasury.
“During the 2021-22 financial year, the government collected Sh45.5 billion of investment income in the form of dividends, surplus funds, directors’ fees and loan interest receipts against a revised target of Sh39.9 billion,” said Treasury in the document.
“State agencies with on-lent loans from the national government paid interest of Sh1.9 billion against the revised target of Sh2.2 billion.”
Earnings from State-owned enterprises have in the recent past been on the decline, largely attributable to the impact that the Covid-19 pandemic has had on business.
Over the financial year to June 2021, the government’s income from profits and dividends dropped 37 per cent from the Sh72 billion reported the previous year.
Treasury said the tough business environment during the height of the Covid-19 pandemic eroded the government’s income.
Measures implemented by the government to contain the virus led to the scaling down of business operations.
The government completely or partially owns 255 corporations operating in various sectors that earn income for the Exchequer in the form of dividends or surplus.
Considerable equity
Treasury further holds considerable equity on behalf of the government in 16 companies, the majority of which are listed. These include Safaricom, Kenya Power, KenGen, Kenya Reinsurance Corporation, KCB Bank and Kenya Airways.
The government has committed to offloading its stake in some of these companies. President William Ruto in October said the government would privatise between five and 10 State corporations over the next one year.
He noted that there are plans to review the legal framework, which has in the past been cited as among the hindrances to the privatisation process.
The Head of State, who spoke at a Nairobi Securities Exchange (NSE) forum, expects most of the privatisation to be undertaken through public offers at the bourse, which he said would also give Kenyans an avenue to buy into the companies.
“I have made a commitment that between five and 10 public enterprises that are mature should be listed in the next 12 months,” he said.
“I expect that the private sector will work with the capital markets so that we can have private sector companies to also list at the stock exchange.”
The government in 2008 came up with a plan to privatise 26 parastatals through the Privatisation Commission but it has only managed to conclude a single deal involving Kenya Wine Agencies in over a decade.
It had targeted selling stakes in the entities to strategic investors and the public through listing at NSE.
The dismal performance has been attributed to, among other factors, a bureaucratic process.
The planned review of the law could ease the process and see more State agencies partially or fully privatised.
More recently, the President said the government is looking for an investor in Kenya Airways, adding that he is willing to sell the entire stake in the national flag carrier.
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