Parliament okays sale of State's Safaricom stake

By Newsflash Writer

Parliament has approved the partial sale of the government’s shares in Safaricom PLC, paving the way for the State to raise more than Sh200 billion to ease mounting fiscal pressure and fund critical development projects.

The decision follows weeks of public participation forums conducted by the National Assembly’s Finance and National Planning Committee alongside the Privatisation and Public Debt Committee across 30 counties.

Lawmakers backed Sessional Paper No. 3, which authorises the government to divest 15 per cent of its stake in the telecommunications giant through a negotiated transaction with Vodacom.

Treasury under pressure

The approval comes at a time when the government is grappling with severe budgetary constraints. The National Assembly’s Finance and National Planning Committee had warned that only Sh29.8 billion would remain for development expenditure in the 2025/26 financial year after meeting mandatory obligations.

Out of projected ordinary revenue of Sh3.321 trillion, Sh1.097 trillion will go toward servicing interest on Kenya’s ballooning public debt, while Sh960 billion will cover the public wage bill. According to the Parliamentary Budget Office, Kenya’s public debt has now reached Sh12 trillion.

Further allocations include Sh415 billion for county governments and Sh205.2 billion for pensions and Consolidated Fund Services. Civil service pensions alone will consume Sh34.4 billion, while the Equalisation Fund has been allocated Sh10.6 billion.

Finance and National Planning Committee Chairperson Kuria Kimani told public forums that the shrinking fiscal space made divestiture unavoidable. He also disclosed that the government held Sh83.236 billion in guaranteed debt in the 2024/25 financial year, including liabilities linked to Kenya Ports Authority, KenGen and Kenya Airways.

Details of the Safaricom deal

Under the approved plan, the government will sell a 15 per cent stake in Safaricom at Sh34 per share — a price set at a 23.6 per cent premium above the six-month volume-weighted average as of December 2, 2025. The transaction is expected to generate about Sh204.3 billion in gross proceeds.

Six million shares will be sold to Vodacom, which already owns 40 per cent of Safaricom.

The Kenyan government currently holds 35 per cent, while public investors own the remaining 25 per cent.

As part of the arrangement, the State will also receive an advance payment of Sh40 billion against future dividends from the remaining 20 per cent stake. About Sh55 billion will later be repaid over six years using dividends from the retained shares, after which the government will resume receiving full dividend payouts.

Safeguards and oversight

Vodacom has committed that the acquisition will not trigger job losses for at least three years. Safaricom will retain a Kenyan chairperson and independent directors to preserve local oversight and governance standards.

The telecommunications firm’s corporate social investment arm, the Safaricom Foundation, will also continue receiving support, according to assurances given during the approval process.

With Parliament’s green light, the transaction now moves to implementation, marking one of the most significant State divestitures in recent years as Kenya seeks to stabilise its finances while maintaining a stake in one of its most profitable companies.