Non-Profit making State Corporations not yet off the hook-Mudavadi.

Prime Cabinet Secretary Musalia Mudavadi has reiterated that hard decisions will have to be made regarding loss making and non-performing state corporations.

This will entail merging or shutting down a number of those public enterprises once a decision is reached.

Mudavadi says with the current economic situation in the country, where the value for the Kenyan shilling against other currencies has largely shrunk and the economy continues to get a battering, the government will have to decide which State corporations justify their existence.

“Soon the government will be pronouncing itself decisively on the matter of State Corporations. The truth of the matter is that we will have to deploy some hard decisions in terms of those state corporations that are non-performing and those one whom will be deemed to be duplicating already existing role.” said Mudavadi.

Mudavadi who was speaking in Mombasa, pointed out that as country we have not been doing well in the restructuring of public enterprises, thus many have become a burden to the tax payers as they draw their budgetary allocation for operations from the exchequer.

Mudavadi who was addressing the members of the Institute of Certified Public Accountants of Kenya-ICPAK during their 40th annual seminar, made a plea to them to support the government in such crucial circumstances since populist voices that speak from a point of no-information and lack of knowledge on the reality at hand will want to scuttle the process once the rubber hits the road.

“When government is taking such bold steps to try and fix the mess which is causing part of the huge burden that is leading to increased public wage bill and mismanagement of public resources, a lot of populist voices with a political inclination tend to emerge. And these politics for a long period have really undermined the efforts towards restructuring of the public sector entities.” said Mudavadi as he called on the accounting professions through their governing bodies to add their voice to such matters of national interest and betterment of the future of the economy of this nation.

In reference to the 2013 Presidential Task Force Report on Parastatal Reforms, Mudavadi said the Abdulkadir Mohammed Task Force made key recommendations which have never been implemented to date, thus criticizing the previous regime to have just postponed a problem that could have been delt with if the report findings were to be worked on.

The task force had recommended the dissolution, merger or transfer of some functions of State Corporations to counties, a move that could have seen ultimately trimming the number of State Corporations from 262 to 187 by a whopping 75 parastatals facing a major shake-up.

“For effective and complementary engagement between the state and markets, there must be a clear separation of policymaking, regulation and service delivery roles,” Mr Mohamed is quoted having said this was the only way out to help enhance performance within the parastatals for them to contribute positively towards spurring economic growth.

According to the report a total of 42 parastatals mostly in the agricultural sector were to be dissolved and 28 others were to be merged, while the roles of 22 were to be transferred to other institutions.

The report then recommended that another list of 21 corporations were to be dropped from the list of State Corporation’s altogether, to be reclassified as professional bodies.

“Picking from the recommendations of the task force, in 2021 treasury acknowledged that the financial performance and operational efficiency of many state corporations had deteriorated, weighing heavily on public finances and increasingly relying on budgetary support from government in the form of grants, subsidies, government loans and debt guarantees.” said Mudavadi.

“The question that arises is that instead of the government in place by then, reducing the number from 262 to around 150 as per the recommendations, those in administration buried their heads in the sand and instead increased the numbers now we are talking of around 348 public enterprises many which are doing a duplication of functions.” added Mudavadi.

“A lot of surgery will have to be done in the coming days to deal with this situation and this is why we have also introduced the aspect of performance contracting within the entire public service since we better bite the bullet now then have some sweetness as we head into the future.” Pointed out Mudavadi.

Mudavadi further stated that the government is putting in place structures that will see all public servants subject themselves to the government code of operations as far as service delivery within their respective areas of operations is concerned.

The one-time finance minister says the days of amassing blame games and not meeting targets for effective and efficient service delivery to the citizens are long gone.

“We want to get the public servants to know that individually you are there within the capacity you are serving in to just draw a salary. Public servant should know from the onset, that you are there to deliver services to Kenyans. Everyone must be able to show with facts, figures and with results that services have been delivered as envisioned and to the required expectations.” Said Mudavadi.

“Since the early days of Rtd President Mwai Kibaki’s tenure when performance contracting was introduced, it has lacked the legal basis. This is what the government is working on to give performance contracting a legal anchor for us to move a notch higher in terms of efficiency, effectiveness, transparency, accountability and prudent management of public resources and service delivery to the citizens.” added Mudavadi.