Auditor General sounds alarm over mounting losses at Kenya Meat Commission
The report paints a worrying picture of a state-owned enterprise hampered by unresolved loans, disputed land assets, unpaid debts and questionable accounting practices.
The Kenya Meat Commission (KMC) is facing a financial crisis, with losses surging to Sh365 million from a previous profit of Sh180 million, according to the Auditor General’s report for the year ending June 2024.
Auditor General Nancy Gathungu’s findings reveal an institution struggling to maintain basic operations, as sales revenue plunged by over Sh1 billion, exposing weaknesses in financial oversight and risk management.
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The report paints a worrying picture of a state-owned enterprise hampered by unresolved loans, disputed land assets, unpaid debts and questionable accounting practices.
The downturn comes despite the earlier intervention by former President Uhuru Kenyatta, who in 2020 transferred KMC’s management to the Kenya Defence Forces (KDF) in a bid to revive the corporation and secure a consistent meat supply for the military and other government agencies.
Management blamed the 38 per cent drop in sales on prolonged droughts that affected cattle quality and supply, as well as delays in payments from government institutions.
“Management attributed the decline in sales to climate change, which caused prolonged drought affecting the quality and availability of cattle,” the report states.
Delays caused by extending payment periods from 72 hours to 30 days further strained KMC’s cash flow.
Gathungu warned that in its current state, the commission cannot operate sustainably without short-term government support.
The audit also uncovered Sh39.8 million in cash and bank balances that could not be verified due to missing documentation, including records for funds held in M-Pesa accounts.
Discrepancies over government loans were highlighted, with Treasury records showing KMC owed Sh977 million while the commission reported Sh365 million.
Treasury had previously directed KMC to formally acknowledge a debt of Sh1.66 billion and provide a repayment plan, which management has yet to implement.
Land management issues were also flagged, with properties valued at Sh17.5 billion having unresolved ownership or title issues.
One parcel in Kwale worth Sh616 million lacked a title deed, while informal settlers have encroached on an 8-billion-shilling sheep and goat ranch, with legal cases still pending.
Outstanding debts and uncollected rents further weaken the corporation. KMC is owed Sh692 million in receivables, with Sh539 million overdue for more than 90 days, mostly from state agencies.
A tenant in Riverside Estate has accumulated Sh13 million in unpaid rent yet continues to occupy the property, while other tenants owe Sh16 million combined from active and vacated units.
“The full recoverability of the outstanding receivables balance of Sh629 million could not be confirmed,” the audit states.
The corporation itself owes Sh19 million in unsettled bills for over a year, placing public funds at risk of loss through litigation, interest and penalties.
Additionally, the report revealed that 79 employees are being paid below the legal one-third minimum threshold, raising further governance concerns.
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