In the financial year 2023-24, the performance of state corporations in Kenya was under close scrutiny, with the government implementing strict measures to curb inefficiencies and boost accountability. The key focus was to rein in extravagance and ensure that public funds were being used effectively. This initiative was part of a broader effort by the Kenya Kwanza administration to streamline government operations and align them with its priorities. The outcome was a mix of profit and loss-making entities, with some sectors showing positive performance while others struggled to meet expectations.
The Government’s Strategy: Austerity Measures
At the beginning of the 2023-24 financial year, the government directed all state-owned entities to cut back on non-essential expenditures. This included a significant reduction in spending on travel, training, legal expenses, overtime, and other non-core activities that had long been seen as areas of waste. These austerity measures were part of the broader fiscal policy aimed at controlling the public wage bill and ensuring that the budget was focused on strategic projects that aligned with Kenya Kwanza’s long-term economic agenda.
The Ministry of Finance also instructed state corporations to harmonize their budgets with the administration’s priorities. This meant focusing on critical sectors such as infrastructure, health, agriculture, and security, while reducing the emphasis on discretionary expenditures. The goal was to ensure that public investments were channelled into projects that would have the greatest impact on the country’s development, rather than funding excessive administrative costs.
Despite the cuts, some state corporations managed to perform well in the 2023-24 financial year. These profit-making entities were able to adapt to the austerity measures and improve their efficiency, leveraging strategic investments and cost-saving initiatives.
One notable example is the Kenya Pipeline Company (KPC), which saw a significant increase in its revenues due to a rise in demand for fuel and oil products. With the government’s emphasis on infrastructure development, KPC was able to capitalize on the growing need for transportation and storage of petroleum products, leading to a notable increase in profits. Similarly, Kenya Power and Lighting Company (KPLC), despite facing challenges in the energy sector, managed to stabilize its finances by improving billing systems and reducing power theft, which helped increase its revenues.
Other profit-making corporations included Kenya Airways, which despite operating in a challenging global aviation environment, showed resilience in its financial results, with improvements in passenger numbers and cargo services. The Kenya Commercial Bank (KCB) also saw growth in profits, benefiting from an increase in credit uptake and investment in digital banking services.
On the other hand, several state corporations continued to operate at a loss, struggling with inefficiencies and poor management. Among the most notable loss-making entities was the Kenya National Airways (Kenya Airways), which, despite efforts to recover, continued to face a difficult financial landscape. Factors such as high operational costs, expensive fuel prices, and the slow recovery of the tourism and travel sectors were major contributors to its poor performance.
Similarly, the National Cereals and Produce Board (NCPB) faced financial challenges due to inefficiencies in the procurement and storage of maize, coupled with the ongoing challenges of managing the country’s food security. The corporation’s financial results were also impacted by delays in government payments and subsidies.
The Kenya Meat Commission (KMC) also struggled, with management inefficiencies and underperformance in its core meat processing and sales operations. Despite the government’s attempt to inject capital and improve operations, KMC was still grappling with high operating costs and a lack of competitiveness in the market.
The Treasury’s directive for state corporations to harmonize their budgets with the priorities of the Kenya Kwanza administration had a mixed impact. While some entities were able to focus their efforts on more strategic, government-aligned projects, others found the process of aligning their objectives with the broader national agenda challenging, especially those in the agricultural and manufacturing sectors that had to deal with both internal inefficiencies and external challenges.
However, the harmonization of budgets did allow for greater oversight and better alignment of resources towards national goals. This was particularly evident in state corporations linked to the government’s big four agenda, including housing and infrastructure, where public-private partnerships began to take root, driving both growth and job creation.
In conclusion, the performance of state corporations in 2023-24 was a reflection of the government’s efforts to bring accountability and financial discipline to the public sector. While some corporations succeeded in navigating the austerity measures and delivering profits, others continued to struggle, highlighting the need for deeper reforms in governance, management, and operational efficiency. Moving forward, the Kenya Kwanza administration’s emphasis on budget harmonization and prioritization of key sectors will be crucial in determining the future of state corporations in Kenya.
