The National Treasury ’s earnings from public investments for the financial year ended June exceeded target by nearly Sh5.81 billion, boosting the non-tax revenue streams and helping ease cash flow pressures in a period when taxes underperformed.
The latest exchequer disclosures show investment revenue amounted to Sh41.3 billion in the review period, overshooting the Sh35.5 billion goal by 16.37 percent.
The flows were boosted by dividends wired to publicly-traded firms, where the Treasury owns shares, as well as semi-autonomous government agencies which charge user fees.
The Treasury, for example, got nearly Sh19 billion gross payout from for its 14.02 billion shares in the giant telco, comprising an interim payout of Sh8.13 billion distributed in March and a final dividend of Sh10.66 billion received in August 2022.
KenGen, which usually delays remittance of dividends to the Treasury, also wired Sh1.3 billion to the exchequer last June for the year ended June 2021.
Additional earnings came from KCB Group, where the State controls nearly 17.5 percent stake or 536.54 million shares.
Other listed firms, which contribute dividend revenue to the exchequer, are Kenya Re, Stanbic Holdings, Liberty Kenya and NSE Plc.
State agencies, which pay dividends are the Central Bank of Kenya, Capital Markets Authority, Competition Authority of Kenya, Kenya Pipeline Company, Kenya Airports Authority and the Kenya Ports Authority.
New KCC, PTA Re, the Kenya Literature Bureau, Afrexim Bank, Africa Re and the National Housing Corporation are other sources of dividend income for the Treasury.
The revenues were, however, 5.4 percent lower than the prior financial year when firms wired Sh43.66 billion to the government’s main account.
The slowdown reflected a softening economy under the weight of elevated inflationary pressures which eroded consumer purchasing power, hurting corporate sales.
Dividend payout was a key driver of the State’s non-tax revenue receipts in the year under review alongside mop-up of surplus funds in accounts of cash-rich semi-autonomous government agencies and fees charged on services such as driving licences, land titling and registration of persons.
The non-tax cash receipts amounted to Sh82.00 billion in the financial year through June, surpassing the Sh65.56 billion target by Sh16.44 billion. This means dividends accounted for about 50.37 percent of the flows.
“The above-target performance in non-tax revenues is a result of investment income (dividends from Government investments), surplus funds from SAGAs and revenues arising from service provision collected through e-citizen,” Albert Mwenda, the Director-General for Budget, Fiscal and Economic Affairs at the Treasury, told the Business Daily last month.
“In the FY 2023/24, we project to collect about Sh75 billion from non-tax revenue sources. This figure may, however, vary depending on the prevailing economic conditions.”
The flows from non-tax revenue also came in a period the Ruto administration renewed the push for state corporations and semi-autonomous government agencies to surrender idle cash in their accounts.
The surpluses are comparable to profits by the State-owned entities and represent the balance between their revenues and expenses after tax.
The Finance and Planning Committee of the National Assembly, for instance, asked the National Treasury to provide a detailed report by September 30 to the finance committee on the surplus funds the entities held as of June 30.
The National Assembly Committee on Privatisation had earlier in the year proposed that all ministries, departments and agencies should use a single Treasury account to ease the collection of the surplus cash.
The proposal is aimed at giving the Treasury unfettered access to billions the entities hold.
