President William Ruto has issued a raft of directives to state corporations to make them efficient and end their reliance on the ex-chequer.
Ruto, who on Tuesday hosted parastatal heads and Chief Executive Officers (CEO) at State House, Nairobi noted that the fiscal austerity and budget rationalisation measures will be undertaken with the view of redirecting resources to priority areas; food security, job creation and health reforms).
The President directed all state corporations to rationalise the proposed recurrent budget for 2024/2025 by 30 per cent based on the 2023/2024 approved budget.
He further directed that all commercial state corporations commit 80 per cent of profit after tax to the payment of dividends, leaving 20 per cent thereof as retained earnings.
This directive is to be effected in the 2024/25 Financial Year.
All regulatory state corporations are now required to remit 90 per cent of surplus funds as per their last audited accounts.
“No money received more than the approved recurrent revenue budget shall be utilised without the approval of The National Treasury,” a dispatch from State House said.
Further, no state corporation shall fund or purchase any capital item for or on behalf of Ministries Departments and Agencies.
State corporations also be required to provide accurate and up-to-date information on all government digital platforms like GIMIS, E-Citizen and others.
The meeting noted that over 63 per cent of public revenue is applied to servicing debt.
“This is not sustainable and National Treasury is under instruction working towards a national balanced budget in three years,” the dispatch added.
State corporations were further obliged to implement measures that seek to enhance their revenue, contain expenditure escalation, boost dividend payout to the government, invest in priority projects and minimise surplus diversion;
They were also urged to enhance non-tax revenue, reduce reliance on Exchequer and cut down on recurrent expenditure.
Ruto plans to sell at least 10 non-performing parastatals in a bid to help improve the upgrade of infrastructure and the delivery of services to Kenyans.
The Cabinet last month approved the sale of seven more State-owned enterprises which is expected to stimulate the expansion of the country’s hospitality industry and grow individual units through private-sector investment.