State Corporation Profitability

State Corporation Boards urged to urgently embark on turning things unto profitability, or otherwise the hammer of privatization will be knocking at their doors.

Prime Cabinet Secretary Musalia Mudavadi has urged members of Boards of State Corporations to immediately get to work and turn around things unto profitability otherwise the hammer of privatization will knock at their doors.

At the induction of various board members of State Corporations which is currently ongoing in Naivasha, Mudavadi was quick to remind them that there is no turning back and no room for laxity, they have to deliver on their mandate with profitable gains both to the citizens and the nation.

“I have previously alluded to the pressure State Corporations exert on the Exchequer. Currently, we have 79 State Corporations that are commercial in nature. Although these agencies have some strategic objectives, their main reason for existence is “for-profit”. They are meant to be a source of revenue for the Government through dividends to the National Treasury.” said Mudavadi

“Unfortunately, only about 5% of the 79 Agencies pay any such dividends. In fact, over 40% of the commercial state corporations turn to the exchequer for financial subsidy. Sadly, in most of these cases, the problem is not one of poor investment decision by the investor (Government), but a consequence of poor governance and lack of strategy by the management of these Agencies.” added Mudavadi.

In the current Government set up, State Corporations are key vehicles through which Wananchi receive Government services. Therefore, high expectations have been placed on the shoulders of the Boards to instill capacity, professionally deliver policies, programs, projects, goods and services in an efficient, effective, transparent and ethical manner.

“Beware that the era of WAZIRI AMESEMA is over because you are collectively responsible as a Board for decisions you make. Your appointment is not your turn to play politics or siphon from State Corporations. And the Board is not your retirement home.” said Mudavadi as he reminded the board members to carefully scrutinize and align themselves with the Terms of Service for Boards as provided for under Section 15(1) of the State Corporations Act that bestows the responsibility of providing strategic direction and policies upon them.

Today’s remarks coming in the wake of the release of Performance Contracting report for the 2021/2022 Financial Year, an exercise that was presided over by the Head of State on Tuesday under the leadership of the Prime Cabinet Secretary, the Boards of State Corporations have been challenged that they have a duty to urgently support the government in the economic resuscitation under the Kenya Kwanza Bottom-Up Transformation Agenda (BeTA). Stating that the justification of the existence of each state corporation will be measurable through key profitable deliverables.

“We have to justify to the Kenyan tax payer, why we are so many and how many of us are now delivering and how many of us are drawing blood from the tax payer. The President in his remarks during the release of the performance contracting report, did not spare us, he himself has a performance contract with the people of Kenya, his is very rigorous, he will be evaluated by millions of people in the next five years, and his contract renewal is dependent on the performance of what he committed and we need to help him. If he realizes that we are threatening his chances of renewal of his own contract, do you think he will spare us. And for me do you think I will be spared? So clearly, we are all in the same boat we have to deliver by making a difference since it has to be a different paradigm shift.” stated Mudavadi in his key note remarks.

“You are required to embrace the Open-Government Partnership Strategies and Initiatives based on the Principles of Transparency, Integrity, Accountability and Stakeholder Participation for Consensus and ownership in policy, programmes and project delivery. The aim is to facilitate the Citizenry to effectively engage and hold Governments at the two levels to account. This should be accompanied by innovative and pragmatic technological solutions to share best practices within institutions to boost the Government’s commitment to good governance.” Pointed Mudavadi.

The Prime Cabinet Secretary also used the occasion to state that The Kenya Kwanza government is keen on implementing its policies as set down in the PLAN and the Kenya Kwanza Manifesto and they will not be at point be swayed to implement any agenda by any other person that is not in tandem with the Bottom-Up Economic Transformation.

Adding that this administration aims at implementing economic policies that will help in the reviving of the economy and to a larger extent help uplift the lives of many Kenyans who are at the bottom of the economic period.

“I keep on asking can President Joe Biden of the United States implement former President Donald Trump’s policies? That is not possible. This is why as Kenya Kwanza we have a program and we are now working on it.” said Mudavadi.

“When you tell us to consider subsidies, they are not free. You have to go back to the tax-payer to finance the subsidies. These are policies that to us are retrogressive. A good reason why we have our policies and we are going to implement them to help turn around the economy.” added Mudavadi.

In his remarks on the raging debate about public debt, the Prime Cabinet Secretary, that debate is causing a lot of haemorrhage within the public sphere with the pending bill debate dominating a good share of the debate.

An aspect that he has attributed to an inherited burden from the previous regime of the handshake.

“From 2015 in my commentary, I kept signaling that the country is on a dangerous borrowing spree and people thought it was a joke, now it has caught up with us. And if you go back and ask yourself how much of this debt is associated with State Corporations, you will be shocked, because the government has in turn guaranteed some of these State Corporations and the programmes they are undertaking are finding their way back to the exchequer. When they default in payment and remittances to the exchequer, the exchequer in turn has to find another source to meet the maturity of those obligations.” said Mudavadi.

“We are causing a lot of haemorrhage if we don’t do things right. In terms of pending bills, there are running close to 1 trillion plus, forget about domestic public debt, forget external public debt, I am talking about pending bills. If you sit back, ask yourself through your actions either by commission or by omission, if you don’t follow the budget and procedure how many Kenyans are you impoverishing, when you signoff, put someone into a commitment, that person goes into the bank, borrows resources then you fail to pay that entity, a Kenyan like yourself who wants to contribute to this country and then you fail to pay that Kenyan and the bank descents on that Kenyan through auctioneers, would you still walk freely knowing very well that you are responsible for impoverishing that person.” ..remarked Mudavadi as he challenged the State Corporation players to be wary of the number of public enterprises that is totaling to 348 yet many do not justify their functionality yet they draw funds from the exchequer.