The public broadcaster KBC cannot meet its financial obligations due to huge debts and outstanding loans, ICT Cabinet Secretary Joe Mucheru has revealed.
Mucheru said KBC has debts amounting to Sh4.2 billion and is unable to repay a Japanese loan of Sh79.9 billion.
“The national broadcaster is technically insolvent. The debts are both recurrent and development,” Mucheru told the Senate Standing Committee on ICT on Wednesday.
A company becomes technically insolvent when it has a negative net asset value- its liabilities are greater than its assets.
Mucheru, however, told senators his ministry is looking at ways of addressing the challenges facing the national broadcaster, saying it plays a critical role in the development of the country.
“The financial problems mean that KBC is unable to undertake reforms recommended in the National ICT Policy,” he explained.
He said KBC staff are never paid on time and are, as a result, highly demoralised. “The financial woes mean that KBC is unable to maintain equipment, implement development projects and achieve its obligations.”
Mucheru added that KBC is faced with an aging staff, with its coverage being only three per cent of the market share.
He said his ministry is having discussions with the National Treasury with a view to bailing out the state corporation.
“KBC needs funding to improve infrastructure, revamp its content, restructure the balance sheet, rationalise staff and re-brand,” he added
Mucheru said Sh11.2 billion is needed in the next five years to get the national broadcaster out of the financial difficulties.
“KBC further requires an additional funding of Sh1.8 billion annually. The draft memo is currently with the National Treasury awaiting their input,” he said.
ICT Principal Secretary Esther Koimett said they are waiting for correspondence from National Treasury. “Once it is completed, we will be able to start the process of dealing with the challenges,” she said.
KBC managing director Naim Bilal promised to revamp the corporation with the support of the government. “We have very clear strategies and comprehensive plans of how we want to turn around KBC,” he said.
Nominated Senator Petronilla Were said the National Treasury should take over the loan from Japan.
“If it is written off, it will be a great thing. We have been saving the national carrier Kenya Airways all the time. Why can’t we save KBC?” she posed.
She added that there should be a policy requiring a certain percentage of adverts to go to KBC.
The committee vice chair Abshiro Halake asked the ministry to provide timelines of their course of action. “With the timelines, we will be able to track the progress being made to save KBC,” she explained.
Troubles in KBC are believed to have started in 1989 when the public broadcaster signed a contract with the Japan Telecommunications Engineering Consultancy Service (JETC) for a Sh1 billion loan to buy equipment to improve and expand broadcasting network.
And in 1991, KBC signed a contract with Marubeni Corporation of Tokyo for upgrading medium wave transmitting stations and construction of new ones.