The National Treasury has raised 66 billion shillings out of a target of 78 billion in dividends and retained earnings from state corporations, Ukur Yatani said on Wednesday.
Ukur Yatani, who is the acting Cabinet Secretary for National treasury said state companies had not been remitting their dividends at the end of every financial year as required by law, denying domestic reports that the move to take the cash would starve the banking sector of liquidity.
“These are just surplus funds. Their operational accounts and all other matters have not been touched,” he told Reuters, adding that the extra cash would be spent on development projects.
Kenya Ports Authority (KPA) said last week that it has remitted Sh18.7 billion to the treasury making it among the top state-owned entity in sending money to the government following a directive ordering State departments to surrender surplus cash.
Kenya Pipeline Company (KPC) and Kenya Airports Authority (KAA) also gave Sh5billion and Sh12 billion respectovely.
Under the latest initiative, the Treasury has directed parastatals to stop re-directing surplus funds to projects before they get approvals.
Although the government’s position is that the money has not been remitted to it by parastatals at the end of financial years for far too long, experts disagree.
Economist David Ndii on Tuesday said that this points to the GoK being in dire straits than it has cared to admit in the past.
‘This (the directive) is going to impair the cash flow of these corporations and in effect, operations and service delivery. The state corporations which have had their own resources will now have to depend on the notoriously unreliable and unpredictable exchequer releases’ David Ndii wrote.
The directive by the government to parastatals follows regulations published in 2018 that demand parastatals to remit reasonable returns to shareholders. Regulators, on the other hand, are required to remit 90 per cent of their net surplus.
President Uhuru Kenyatta ordered parastatals to surrender surplus cash to the Treasury, as the government looks for ways to finance its development projects and pay debts that have now gone through the ceiling.
Kenyan Business Feed is the top Kenyan Business Blog. We share news from Kenya and across the region. To contact us with any alert, please email us to email@example.com