State corporations have remitted to the National Treasury about half of the targeted Sh78 billion, days after they were ordered to do so in new austerity measures initiated by acting Treasury Cabinet Secretary Ukur Yatani.
The new measures are meant to help the government address a biting cash crunch that is threatening to cripple President Uhuru Kenyatta’s Big Four projects.
“We are happy with the progress and we expect to hit the target,” Mr Yatani told the Sunday Nation. “A few days after making the announcement, we have received Sh33 billion. These funds will be injected into development projects in line with the Big Four agenda.”
Parastatals are required by the law to remit surplus funds to the Consolidated Fund every year, rather than keeping the cash in commercial banks.
The order to return the unspent money is among reforms that Mr Yatani has initiated in efforts to save the struggling economy.
On top of ensuring State corporations remit their unspent balances, Mr Yatani wants them to make full disclosures of internally generated revenues.
On Saturday, Dr Daniel Manduku, the Kenya Ports Authority managing director, said the agency had handed in Sh18.7 billion to the Treasury as a special dividend.
“KPA was able to pay its main shareholder, the Government of Kenya, a return on investment and was the highest contributor among parastatals,” Mr Manduku said. “We wired the initial Sh18 billion, which had been saved, and another Sh700 million in Treasury bills as interest accrued over time. The KPA management attributes the surplus cash to prudent financial management and savings.”
The Kenya Revenue Authority also handed in a cheque for Sh6 billion on Friday.
Earlier on Tuesday, Kenya Pipeline Company was the first to hand over its cash amounting to Sh5 billion, just a day after President Kenyatta summoned the heads of State corporations and reinforced the Cabinet secretary’s orders to surrender the excess cash.
“What we had was not ‘idle cash’ but cash generated by efficient operations. It could have been invested, or paid back to the shareholders,” said KPC chairman John Ngumi on Thursday.
The Sunday Nation has learnt that the Kenya Airports Authority plans to wire Sh12 billion to the Treasury. Whether the other parastatals plan to remit their unspent balances is uncertain, as most of them have disobeyed such orders in the past.
There are 34 commercial State corporations and 21 others with strategic functions. Other than KPA, KAA and KPC, the other top commercial parastatals by turnover and profits are Kenya Power and Kenya Re Insurance Corporation.
There are several corporations that have been making losses. These include the National Cereals and Produce Board, Numerical Machining Complex, Kenya Industrial Estates Ltd and Kenya National Trading Corporation.
The State corporations’ dividends come as the Treasury grapples with a budget deficit against the backdrop of less-than-expected revenue collections and a burgeoning debt.
Parastatals usually remit annual dividends to the government – their main shareholder.
A November 27, 2018 Treasury circular addressed to principal secretaries, accounting officers and chief executives of State corporations demanded that all commercial parastatals “generate reasonable returns and should declare and pay dividends to the National Treasury and to other shareholders, where the State corporation is not wholly owned by the government.”
“All regulatory authorities are required to remit to the National Exchequer 90 per cent of the operating surplus for the preceding financial year upon completion of audit.” Parastatals are the biggest buyers of Treasury securities, which means that in some cases the government borrows its own money and pays interest on it.