Auditor backs shutdown of cash-strapped parastatals

Auditor-General Nancy Gathungu has recommended that financially struggling state agencies be scrapped or merged with their parent ministries to curb wastage of public funds.

She said while parastatals are critical in implementing government projects and policies, there is a need to keep them sustainable through radical restructuring, and scrapping those that cannot deliver, has become a reality.

“Where we are finding difficult is that a State corporation year-in-year-out is not adding value, is not carrying out its mandate as it’s meant to be but we are still funding it. We need to rethink, should the mandate of that state corporation continue being under the State corporation or should we consolidate it with the mandate of the mainstream parent ministry,” said Ms Gathungu when she addressed an accountants' forum in Nairobi yesterday.

“But again we need to call the managers and the leadership in the State corporations to be accountable for the work they have been given.” 

The Treasury has budgeted Sh95.5 billion to partly ease the cash crunch in key parastatals in three years from July 2022, citing their strategic roles in economic development. A fiscal risk analysis conducted early this financial year estimated 18 key parastatals face a cash shortfall of Sh382 billion in five years after Covid-19 hurt their revenue streams.