The Kenya Bureau of Standards (KEBS) has officially joined the growing list of financially distressed state corporations, with a new audit report revealing it is technically insolvent and heavily reliant on government support to remain operational.

According to the Auditor General’s report for the financial year ending June 2024, KEBS is operating under severe financial strain, with liabilities amounting to Sh3.2 billion far outweighing its assets of Sh1.85 billion leaving the bureau with a negative working capital of Sh1.3 billion.

Auditor General Nancy Gathungu flagged concerns over the sustainability of the bureau’s services under the current financial conditions. “The bureau is technically insolvent, and the financial statements have been prepared on the assumption that it will continue operating with ongoing financial support from the national government, creditors and bankers,” reads the report.

The audit also identified long-standing trade and other payables totaling Sh1.68 billion, with Sh319 million overdue for more than 12 months.

The bureau did not provide adequate justification for its failure to settle the outstanding obligations, raising fears over its liquidity position and the risk to livelihoods of creditors who have not been paid.

Further, the report noted the bureau is owed Sh188.6 million in receivables that have been outstanding for over a year.

The Auditor General warned that lack of proactive debt recovery strategies could lead to significant revenue losses.

Operational challenges are compounded by a staffing imbalance.

KEBS currently has 1,117 employees against an approved establishment of 1,441, leaving 324 positions vacant. Simultaneously, some departments are overstaffed, with 104 employees exceeding the approved structure.

KEBS now finds itself in the company of other debt-ridden parastatals such as the National Oil Corporation of Kenya, Kenya Broadcasting Corporation, Nzoia Sugar, the Postal Corporation of Kenya, and the National Museums of Kenya all struggling to stay afloat amid liquidity crises.

The National Oil Corporation, for instance, recorded a Sh2.24 billion loss before tax in 2024, pushing its cumulative losses to Sh8.3 billion.

The corporation’s liabilities of Sh12.8 billion far exceed its asset base of Sh1.2 billion, placing it in deeper financial jeopardy.

These findings come amid a stalled state corporation reform agenda. Although the Cabinet in January approved a plan to merge 42 parastatals into 20 in a bid to cut waste and improve efficiency, implementation has dragged. By March 31, 2024, the total pending bills across these entities had ballooned to Sh94.4 billion.