Kenya’s decision to sell a portion of its 34.9% stake in Safaricom, East Africa’s most profitable company, is more than a privatization headline—it’s a clear sign of urgent fiscal maneuvering. With debt repayments spiraling and tax fatigue rising among citizens, the government is turning to one of its crown jewels to shore up its balance sheet and maintain economic stability.
Safaricom, valued at approximately $6 billion (KES 800 billion), has long been a critical pillar of Kenya’s economy, largely due to M-Pesa, its mobile money platform, and its expanding digital ecosystem. In FY 2024 alone, Safaricom recorded $540 million (KES 69.8 billion) in net profits—an 11% increase year-over-year—driven by growth in data revenue and contributions from its Ethiopia expansion. The company declared a dividend of $130.5 million (KES 16.8 billion) to the Kenyan government, showcasing its consistent cash generation and investment appeal.
The planned sale, expected before the end of FY 2025/26, is part of a broader privatization drive to raise $1.1 billion (KES 149 billion)—an amount roughly equal to 10% of Kenya’s projected tax shortfall for the fiscal year. With Kenya’s public debt now at $88.5 billion (KES 11.4 trillion)—up $20.8 billion in less than three years—the Treasury is exploring non-tax revenue options to prevent further public backlash.
The Economic Drivers Behind the Sale
• Debt Service Crisis: In the first eight months of FY 2025/26, Kenya spent $5.5 billion (KES 722 billion) on interest payments—over 50% of its $10.8 billion (KES 1.4 trillion) tax revenues in the same period. Interest costs are projected to surpass $7.7 billion (KES 1 trillion) by year-end.
• Limited Financing Options: With both domestic and external borrowing tightening, and austerity politically sensitive, divestment from high-value state assets offers a path forward.
• Investor Appetite: Africa-focused institutional investors and private equity firms are increasingly seeking stable telecom assets with strong margins—Safaricom fits the bill. At its current price of $0.15 (KES 19.9) per share, Kenya’s stake is worth around $2.1 billion (KES 280.5 billion), offering a ripe opportunity for block sales or public offerings.
Kenya’s last sale of Safaricom shares in 2008 raised $400.5 million (KES 51.75 billion), in one of Africa’s most successful IPOs. This time, the stakes are higher, the urgency greater, and the fiscal runway shorter.
Privatization is no longer optional—it’s economic triage.
