Auditors have expressed doubt over the long-term survival of the State-owned Kenya Meat Commission (KMC) due to sustained losses that are straining its ability to continue as a going concern.
The meat supplier’s net loss in the year to June 2025 more than doubled to Sh410 million from Sh168 million a year earlier, after sliding back to the red following a brief profit run in 2022.
KMC’s management attributed the increased loss making in the review period to cash flow challenges resulting from unpaid bills by several State agencies, which comprise the bulk of its clientele.
An audit of its book by the Auditor-General’s office revealed that the firm is also operating far below capacity due to worn-out machines, huge unpaid debt from suppliers, and is struggling to sustain its operations.
“In the circumstances, the continued accumulation of losses signifies persistent financial underperformance and sustainability challenges, casting doubt on the Commission’s ability to operate profitably and achieve its financial objectives,” said Auditor-General Nancy Gathungu in the audit report.
During the period, KMC’s sales declined by Sh67 million to Sh1.6 billion from Sh1.71 billion in 2024, driven by low livestock supply due to a huge debt owed to farmers, some of which has been pending for years.
Its financial statements reveal that its debt to farmers and other creditors, including unremitted statutory deductions, increased to Sh488 million from Sh337 million, a rise of over Sh150 million.
The debt included Sh83 million unremitted staff pension funds and Sh115 million unpaid corporate income tax owed to the Kenya Revenue Authority.
At the same time, the amount it is owed by different debtors increased by Sh1.8 million to ShSh694 million from Sh692.2 million, most of which it is owed by several government agencies.
The audit found that State agencies owed KMC Sh552 million, accounting for 80 percent of the firm’s receivables, and had been pending for over three months.
It was also owed Sh19 million in rental income, and had another Sh126 million outstanding receivables that was unsupported, disputed, or untraceable, raising doubts over their recovery.
Amid the mounting debt and losses, KMC has been unable to service many of its equipment, which have since become obsolete and unserviceable, reducing its production capacity.
“The absence of timely repair, replacement, and modernization of obsolete machinery has compromised production efficiency, increased operational costs, and limited the Commission’s ability to meet the demand for its products,” said the Auditor-General.
KMC’s fortunes began to improve after President Uhuru Kenyatta’s administration replaced its management with military leadership, as part of a larger operation to revitalize loss-making State entities.
The year ended June 2022, the first full year one under military leadership, marked the firm’s best performance in decades, with a profit of Sh242 million, overturning a loss of Sh34 million the year before.
However, in January 2023, President William Ruto reversed the military’s takeover, moving KMC from the control of the Ministry of Defence back to the Ministry of Agriculture under the State Department of Livestock Development.
Records at the National Treasury show that, although the firm had been in the red for over a decade, its financial position began to improve in 2019, leading to a cut in its losses from Sh117 million in 2019 to Sh96 million by June 2020.
The trend continued into 2021, when the meat supplier’s losses decreased further to Sh34 million, before it turned a profit of Sh242 million in 2022.
However, the upturn was short-lived, with profits dwindling to Sh180 million in 2023 before reversing to a loss in the year to June 2024, which more than doubled in the year to June 2025.
KMC has yet to disclose its results for the year ending June 2026 and audit reports are often delayed before publication. The financial performance could jeopardise plans to privatise the State corporation, which are intended to improve its long-term efficiency and viability.
