Posta, Nema and Rivatex in deep red, report says
Workers at Rivatex in Eldoret. Posta, Rivatex and Nema are among state entities struggling to stay afloat out of 30 scrutinised by Parliament based on Auditor-General reports.
The Postal Corporation of Kenya (PCK), Rivatex and the National Environment Management Authority (Nema) are among State entities struggling to stay afloat out of 30 scrutinised by Parliament based on Auditor-General reports.
In the comprehensive report by the Public Investments Committee, the three have been flagged for posting losses.
“This raised questions about the sustainability of state corporations as well as their ability to meet their obligations in the long run if the trends persisted,” the committee report tabled last week said.
It cites Nema’s financial woes to have stemmed from the scrapping of the Environmental Impact Assessment levy on all construction projects in 2016, which was its milk cow, contributing over Sh500 million in revenue every year back then.
The report reads: “In the financial year 2017/2018, Nema had a negative working capital of Sh19.6 million and the trend has continued to the subsequent financial year with the authority making a loss of Sh78 million in the financial year 2019/2020 thereby affecting operations of the authority due to budget deficit.”
Worsening business environment
The team is also uncertain of PCK’s long-time financial health due to a worsening business environment in the past decade.
“Further, cash flow challenges have affected [non-discretionary] expenditure such as payment of salary. The continued sustainability of the corporation is at risk unless drastic measures are put in place to make it afloat,” the reports say.
Recommending that heads of state corporations develop and run models that maximise returns as they serve the public, the lawmakers noted that Rivatex East Africa’s financial status had been dwindling since 2015.By 2016, the report notes, it had accrued Sh1.02 billion in losses.
‘Massively dependent’
“For instance, it recorded turnover of Sh98,172,058 during the year 2015/16 as compared to Sh118,425,640 during the year 2014/15 a decrease of approximately 17.1 per cent.
“Net loss increased from Sh109,178,538 in 2014/2015 to Sh132,543,477, which was approximately 17.6 per cent to bring the accumulated losses to Sh1,020,603,854. Though there has been slight improvement in the year 2019, the entity was massively dependent on government support to operate,” the report states.
