Parastatal chiefs face fines for non-profits remittance
President William Ruto addresses parastatal chairpersons and Chief Executive Officers at State House, Nairobi.
What you need to know:
- Presidential order was included in performance indicators for the current financial year ending June 2025.
- Kenya has 46 commercial State-owned entities, the majority of which are in the transport and energy sectors.
Chief executive officers of commercial State corporations who fail to surrender 80 per cent of profit after taxation face sanctions after a presidential order was included in performance indicators for the current financial year ending June 2025.
The contracting guidelines for the financial year 2024/25, which were issued to Principal Secretaries last Friday, have modified the policy on dividends to be remitted to the exchequer to include the presidential directive issued in late March.
“All commercial State corporations should provide 80 per cent of profit after tax for payment of dividends as provided in the National Treasury Circular No.2/2024 of 27th March,” Prime Cabinet Secretary Musalia Mudavadi wrote in the guidelines to the PSs.
“Kindly bring the contents of this circular and the attached performance contracting guidelines for the financial year 2024/2025 to the attention of all the institutions under your purview.”
Kenya has 46 commercial State-owned entities, the majority of which are in the transport and energy sectors where they offer strategic functions.
These include Kenya Airports Authority, Kenya Electricity Generation Company, Kenya Power and Lighting Company, and Kenya Railways Corporation.
President William Ruto issued the order on the threshold of net earnings, which should be surrendered to the exchequer during a meeting with chairpersons and chief executives of parastatals at State House on March 26.
This was followed by a circular from the Treasury a day later. The directive also included the requirement to cut expenditure on operation, administration, and remuneration of staff by 30 per cent.
“The money that some parastatals make does not belong to their boards or management. It belongs to the people of Kenya as a return on investment. We have to shut down some of those loss-making parastatals. We must end excess capacity,” Dr Ruto said at the time.
CEOs were previously only required to wire dividends to the National Treasury as a “shareholder in a government agency during the distribution of profit.”
