The Government has been pumping taxpayer’s money into parastatals and companies that atre on their deathbeds in a bid to resuscitate them. Here are some companies that have been revived from such struggle in the past:
Kenya Power
The Government paid the national power utility Sh2.8 billion, which it was owed by various ministries that had failed to pay their electricity bills. Though not a bailout in the strictest sense of the term, the amount has been discussed as one. Generally, the parastatal, which is listed at the Nairobi Securities Exchange (NSE), is doing well. The utility’s half-year, pre-tax profit between July and December 2014 rose by 52 per cent to Sh6.4 billion. This is despite the frequent blackouts for which the firm has been criticised.
National Bank of Kenya
In 2006, the National Bank of Kenya (NBK), like many other parastatals then, was on the brink of collapse. The Government settled about Sh20 billion of its debts. It had begun to pick up until it found itself navigating stormy waters again early this year, igniting fears the bank might find itself saddled with bad loans again. NBK has embarked on an exercise of auctioning some of its properties, necessitated by the delay in the rights issue approved by shareholders in 2013. There have been suggestions that the bank be merged with other State financial institutions.
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Kenya Meat Commission
If there was a trophy for a parastatal with the most bailouts, it would easily go to this entity. The Government in its 2015-16 Budget allocated Sh600 million for the commission’s revival. The abattoir re-opened in 2006 after staying out in the cold for 15 years. Despite the hundreds of millions of shillings that have been poured into it, KMC has persistently posted disappointing financial results. It posted its first profit of Sh51 million in 2012 after years of massive losses, despite growing demand for meat products in the Middle East, Asia and other markets in Africa. It has outstanding loans amounting to about Sh940 million.
Uchumi Supermarkets
The retailer fell into financial and operational difficulties in the early 2000s, characterised by a huge debt that reached Sh2 billion, and was put under receivership in 2006. The Capital Markets Authority suspended the company from the NSE.
The Government advanced the retailer a loan of Sh675 million and on July 15, 2006, the company resumed operations. A new crop of managers, led by Jonathan Ciano as CEO, came in to breathe new life into the firm.
Uchumi last year had a rights issue that was oversubscribed by 83 per cent, raising Sh1.6 billion against a target of Sh896 million. The money is being used to drive expansion and refurbish existing branches. However, things have started going wrong, with revelations that some suppliers have been defrauding the supermarket.
Pan African Paper Mills
When the Western parliamentary caucus left State House after getting the Head of State’s assurance that Sh1 billion would be wired to Mumias Sugar’s bank account a few weeks ago, it indicated it would shift its focus to the revival of the defunct Webuye-based Pan Paper Mills. Should this happen, it would not be the first time the State is called upon to bailout the mill. The machines went quiet in 2009, and calls for its revival have long been trumpeted by political players.
Telkom Kenya
The Government has pumped billions of shillings of taxpayer cash in the inefficient telecom monolith that was known as the Kenya Posts and Telecommunication Company. But nothing tangible came out of this inordinate expenditure. It was sold in December 2007 to France Telecom. Eight years down the line, none of the objectives for which Telkom Kenya was sold have been met in a classic illustration that privatisation is not always the miracle it is billed to be.
Kenya Broadcasting Corporation (KBC)
The State broadcaster’s dominance faded with the entry of other media players in the market. It took a loan from the Japanese Agency for International Development on the strength of cash flows expected from the sale of television permits, but the laws were later abolished leaving KBC with an outstanding debt of Sh32.3 billion. The Government, which was the broadcaster’s guarantor, has been servicing this loan and has so far paid Sh7.1 billion.
Tana River Development Authority
The Government has paid about Sh2.4 billion that Tarda owes to international lenders including America’s USAid. Although the SOE has since been incorporated, it has not been solvent enough to pay back the Government.
