State dividends and profits drop to KSh45b
State dividends and profits (income from government companies) drop to KSh45b for the second year in a row
State dividends and profits (income from government companies) drop to KSh45b for the second year in a row.
In the year ending in June 2022, the state’s income from the profits and dividends of the corporations it owns decreased by 9% as the economy continued to suffer due to the effects of the Covid-19 pandemic.
The government made Sh45.53 billion throughout the course of the fiscal year from the many businesses that it either wholly or partially owns, which was Sh4.5 billion less than the Sh49.98 billion made during the same time period in 2021.
The Budget Review and Outlook Paper (Brop) from the National Treasury stated that the government had anticipated receiving Sh39.9 billion over the course of the year, but the actual collections were greater.
“During the 2021-22 financial year, the government collected Sh45.5 billion of investment income in the form of dividends, surplus funds, directors’ fees, and loan interest receipts against a revised target of Sh39.9 billion,” said Treasury in the document.
“State agencies with on-lent loans from the national government paid interest of Sh1.9 billion against the revised target of Sh2.2 billion.”
The impact of the Covid-19 pandemic on business has contributed significantly to the recent reduction in State-owned enterprise earnings.
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The government’s income from earnings and dividends throughout the fiscal year ending in June 2021 decreased 37% from the Sh72 billion reported the previous year.
When the Covid-19 outbreak was at its worst, the Treasury reported that the challenging business environment had reduced government revenue.
The government completely or partially owns 255 corporations operating in various sectors that earn income for the Exchequer in the form of dividends or surplus.
Treasury further holds considerable equity on behalf of the government in 16 companies, the majority of which are listed. These include Safaricom, Kenya Power, KenGen, Kenya Reinsurance Corporation, KCB Bank, and Kenya Airways.
The government has committed to offloading its stake in some of these companies.
President William Ruto in October said the government would privatize between five and 10 State corporations over the next one year.
“I have made a commitment that between five and 10 public enterprises that are mature should be listed in the next 12 months.
“I expect that the private sector will work with the capital markets so that we can have private sector companies to also list at the stock exchange,” Ruto said as quoted earlier.
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