Run state agencies well to avoid bailout – Business Daily
An aerial view of the Lake Basin Mall in Kisumu on January 23, 2018. PHOTO | TONNY OMONDI | NMG
Another state corporation is in financial distress and is seeking a bailout from the government. The Lake Basin Development Authority, says it is unable to generate enough revenue to pay KCB debt which has accumulated to unsustainable levels due to a series of defaults.
The bailout of parastatals has always elicited divisive debate among economic experts and Kenyans in general.
The question is, do these state companies deserve to be rescued, especially now that state coffers are running dry?
A compelling case has been made for a continued bailout of strategic companies such as Kenya Airways. Indeed, if these parastatals can be given a financial lifeline by the Treasury, brought back on their feet and continue rendering important services to the taxpayers, then no one would argue against bailouts.
However, cases are common where these state agencies are run down by rampant corruption and ineptitude. Request for financial support by such firms is certainly unjustified.
Even when they are bailed out, some never recover fully from their woes and the state just ends up throwing good public money after bad.