The government’s renewed plan to sell the Kenya Meat Commission (KMC) to a strategic investor stalled at its early stages, largely due to delays in reconstituting the firm’s board of directors, new disclosures show.
Documents from the National Treasury show that the proposed sale, which was initially planned to start last year, was not completed due to missing information and later the expiry of the tenure of the majority of independent board members.
“The information required to complete the development of a specific privatisation proposal for KMC was partially generated due to initial challenges in the completion of preparatory work that has since been addressed,” Treasury Principal Secretary Chris Kiptoo wrote in budget documents to lawmakers.
“Preparation of this proposal will progress once the commission (KMC) is fully constituted. The term of the previous one…expired in November 2024.”
The terms of six non-executive commissioners, or board members, ended on November 6, last year.
They are Brigadier (Rtd) Charles Otiato, Brig (Rtd) George Ejalan, Brig (Rtd) Philip Lepakio, Brig (Rtd) Joseph Mweu, Dr Patricia Kingori-Mugendi and Ms Mary Mulili (the managing director of UBA Kenya).
KMC was among a group of State-owned entities that were taken over by the Kenya Defence Forces (KDF) in 2020 following an order from retired President Uhuru Kenyatta in a bid to boost operational efficiencies.
President William Ruto initially reversed Mr Kenyatta’s order under Executive Order No.1 of January 6, 2023, by returning KMC to the State Department for Livestock Development under the Agriculture ministry. However, the military continued to manage operations at the firm’s facilities.
Dr Ruto, however, made a U-turn through Executive Order No.2 of November 2, 2023, handing KMC back to the Ministry of Defence.
The government has been looking to offload the meat processor over the last decade.
Before transfer to the military in September 2020, the government had already started the process of selling KMC by seeking consultants to establish the financial health of the firm to inform valuations and prepare contracts, including share transfer agreements.
The Athi River-based firm is part of the initial privatisation programme approved during the reign of former President Mwai Kibaki. The programme has two transactions left for privatisation, the other being Agro-Chemical and Food Company Limited (ACFC).
KDF was initially brought in to oversee the upgrade of KMC facilities and improve efficiency, with an initial budget of Sh80 million to prepare the ground for an eventual sale to a private investor.
In March 2021, the military wrote to the Privatisation Authority, then called the Privatisation Commission, requesting that KMC be struck off the list of State-owned entities in the privatisation programme, signalling that the firm was not ready for sale.
The State reckons that privatisation will make KMC economically viable and boost the export of animal products abroad with a focus on the Middle East.
The latest audited financial performance reports show KMC’s sales amounted to Sh2.78 billion in the year ended June 2023, down slightly from Sh2.80 billion the year before.
The firm returned a Sh126.18 million after-tax profit, a 47.90 percent contraction from Sh242.19 million in the prior year. KMC’s total assets were estimated at Sh3.32 billion in June 2023, a 13.84 percent drop from Sh3.85 billion a year earlier.
End of monopoly
KMC initially benefited from a monopoly policy in the sale of meat in Nairobi until Kenya’s first president, Jomo Kenyatta, opened the market to private entities following a petition by the Kenya National Butchers Union, then led by the late Gerishon Kirima.
It has since lost out to private abattoirs in Dagoretti and Njiru.
The planned sale of the meat processor, which started operations in 1950 pre-independence era, to strategic investors is aimed at reducing its reliance on taxpayers.
This will free up cash when the government is struggling to mobilise cash to fund development projects such as infrastructure.
