The Mystery of Sh2.2bn Ordered by Moses Kuria from Kebs Kitty
Four months after the Kenya Kwanza administration took office, the Kenya Bureau of Standards (Kebs) was issued an unusual directive by the Ministry of Industry, Trade, and Investments, led by former Gatundu South MP Moses Kuria.
Kuria announced that the government aimed to reduce dependency on imports while boosting exports. Consequently, Kebs was instructed to allocate a portion of its annual revenue to the Kenya Export Promotion and Branding Agency (Keproba), a distinct State body that also receives annual budget allocations from the National Treasury.
This directive raised eyebrows because Keproba, as a State corporation, exists solely to promote Kenyan exports and bolster the country’s global brand image, thus contributing to export growth.
Under the new mandate, Kebs was required to transfer Sh2.2 billion to Keproba.
Keproba, established in 2019 through the merger of the Export Promotion Council and the Brand Kenya Board, had its export promotion strategies detailed in the 2019-2022 strategic plan. These strategies were reiterated in the 2023-2027 strategic plan.
During the 2022/23 financial year, Keproba employed 82 staff members and received a budget of Sh1.019 billion. In contrast, Kebs employed 1,200 staff—more than six times Keproba’s workforce.
Notably, Keproba is also slated for a merger with the Kenya Tourism Board, Tourism Research Institute, and Kenya Yearbook Editorial Board as part of President Ruto’s austerity measures announced in June.
When asked about the legality of the deal on Thursday, Kuria declined to comment.
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“Look for something useful to do,” Kuria said before abruptly ending the call.
This directive caused concern at Kebs, prompting its leadership to strategize on how to manage the financial impact of the proposed funds transfer.
Documents reviewed by the Nation revealed that Kebs’ National Standards Council convened a special meeting on November 4, 2022.
The meeting’s sole agenda was to deliberate on sharing Kebs’ Import Revenue with Keproba.
The Ministry of Industry and Trade had proposed reallocating Sh1.26 billion from destination inspection fees and Sh453.43 million from Pre-Export Verification of Conformity royalties.
By this time, the total amount requested had been reduced to Sh1.7 billion.
Kuria had indicated that Keproba would utilize the funds to develop an export development strategy, as reflected in the Board paper and meeting minutes.
Complying with the funds transfer would have significantly impacted Kebs, forcing it to dip into its operational budget.
This meant that without finding ways to boost revenue—whether by raising service charges or creating new revenue streams—Kebs would struggle to meet payroll.
“The amount allocated to Keproba will enhance the capacity to grow exports. However, Kebs must revise its operational activities or identify alternative income sources, as employee costs total Sh2.5 billion, leaving only Sh800 million for operational expenses,” noted a Board paper dated November 3, 2022.
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Kebs had already implemented austerity measures as directed by the National Treasury to cut non-essential spending. Nevertheless, the Board partially agreed to allocate Sh1.2 billion for the project.
“The revenue-sharing will strain Kebs. Despite budget rationalization per the National Treasury, we can only support Keproba with Sh1.2 billion; otherwise, we risk reporting a deficit if we meet the full Sh1.7 billion request,” the Board paper further elaborated.
After reducing the potential transfer to Sh1.2 billion, the National Standards Council emphasized that the transaction would only proceed if Kebs generated the expected income.
The Kebs board, however, decided not to send the funds directly to Keproba. Instead, they approved the transfer to the National Treasury, which would then disburse it to Keproba.
Treasury PS Chris Kiptoo did not respond to calls and text messages asking whether the ministry was aware of and formally approved the arrangement between Keproba and Kebs, facilitated by the Investment, Trade, and Industry Ministry.
On Friday, Keproba CEO Floice Mukabana stated that Keproba did not receive any funds from Kebs.
“The Kenya Export Promotion and Branding Agency did not receive any funding from the Kenya Bureau of Standards for the Export Promotion Strategy,” Mukabana said in an email response.
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However, Mukabana did not clarify whether Keproba received funds from the Exchequer, to whom Kebs had decided to remit the Sh1.2 billion.
She also did not confirm whether Keproba received funds for the export promotion strategy in subsequent financial years.
At the time of the deal, Kebs was struggling financially.
Kebs stated that it consistently adheres to legal mandates requiring State agencies to remit all surplus funds to the National Treasury.
“Kebs has consistently complied with this requirement, and all financial transactions are conducted with full transparency and accountability under government regulations. Furthermore, Kebs has not engaged in any financial arrangements or projects that would compromise our ability to fulfill our regulatory duties and commitments to our staff and stakeholders,” the agency stated on Saturday.
For the financial year ending June 2020, Auditor-General Nancy Gathungu reported that Kebs was technically insolvent, with assets totaling Sh1.06 billion against liabilities of Sh2.23 billion.
By the end of the 2022/23 financial year, Kebs’ situation had improved, but it remained technically insolvent. Assets were valued at Sh1.325 billion, still outweighed by liabilities of Sh2.256 billion.
In the 2022/23 financial year, Kebs generated revenue of Sh5.04 billion, while its expenses totaled Sh5.4 billion.
The Mystery of Sh2.2bn Ordered by Moses Kuria from Kebs Kitty
