State investment earnings down 23pc in first quarter

National Treasury

The National Treasury Building in Nairobi. National Treasury data shows the government earned Sh14.5 billion from dividends in the three months to September, a Sh4.2 billion drop from the Sh18.7 billion it earned during the same period last year.

Photo credit: Pool I Nation Media Group

The government’s earnings from public investments fell by 23 per cent in the first quarter of the financial year 2022/23, signalling depressed earnings by enterprises in which it holds stakes.

The Treasury data shows the government earned Sh14.5 billion from dividends in the three months to September, a Sh4.2 billion drop from the Sh18.7 billion it earned during the same period last year.

The reduced earnings could slash the Treasury’s revenues from dividends by the end of the fiscal year in June — dealing a blow to the State which is pressed for funds to finance key development projects.
The Treasury had expected to increase its dividends revenue to Sh31.5 billion in the fiscal year 2022/23 to boost its coffers.

The high dividends revenue in the first quarter of last year had set the State on course to collect Sh43.66 billion in dividends in the financial year to June this year from its stakes in commercial State corporations and public companies.

The earnings were, however, less than half of the Sh116.14 billion that the government earned from its shareholdings in the financial year 2019/20, signalling that firms are yet to fully recover from the economic downturn caused by Covid-19.

Kenya has more than 280 State corporations, according to data from the Inspectorate of State Corporations (ISC), but only a few are commercial entities that generate reasonable dividends for the government.

Commercial parastatals

The State owns stakes in commercial parastatals such as KenGen, the Central Bank of Kenya (CBK), Kenya Power, Kenya Wine Agencies (KWAL), Kenya Meat Commission (KMC), and the East African Portland Cement  Plc.

The Treasury also holds stakes in Safaricom, Kenya Airways (KQ), Kenya Reinsurance Corporation (Kenya Re), and in local lenders such as KCB, National Bank, Stanbic Bank, Consolidated Bank, Development Bank, and Housing Finance Bank.

The CBK, which generates its income from interest on loans, extended to banks and government overdrafts as well as currency conversions, disbursed Sh10.5 billion in dividends to the Treasury last year, helping to ease a cash crunch at the exchequer.

Safaricom is the single largest dividend earner for the Treasury owing to its 35 per cent stake in the company.

The exchequer received an interim dividend of Sh8.97 billion from the telco in February followed by a final dividend of Sh10.5 billion in August.

However, the company’s earnings dropped in the first six months of its current financial year, indicating that the Treasury will get a big hit on its dividends. Safaricom reported an 18.4 per cent drop in profits in the half year to September, attributing the fall to heavy costs incurred during its entry into Ethiopia.

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