The news:
Kenya plans to raise KSh149 billion ($1.16 billion) in the 2025/2026 financial year by selling stakes in state-owned firms, including Safaricom.
The government currently holds a 35% stake in Safaricom, having sold 25% via IPO in 2008.
The sale aims to generate revenue without imposing new taxes, amid growing fiscal pressure.
Kenya’s government is set to reduce its stake in Safaricom, the leading telecom operator in the country, as part of a broader strategy to raise KSh149 billion ($1.16 billion) in the upcoming financial year through the sale of stakes in various state-owned companies. This decision could have a significant impact on Kenya’s tech and telecom sectors, given Safaricom’s pivotal role in the digital ecosystem.
The move to offload more Safaricom shares is primarily driven by the escalating burden of debt repayments that Kenya is facing. The country’s expenditure on interest payments alone between July 2023 and February 2024 amounted to $5.5 billion (KES 722 billion), surpassing half of its total tax income during that period. With projections indicating a further increase in interest payments to over $7.7 billion (KES 1 trillion) by the end of the year, the government is under pressure to explore revenue-generating avenues.
Safaricom’s appeal to investors remains strong, particularly due to the success of its mobile money service, M-PESA. In 2024, the telecom giant reported an 11% rise in net earnings, reaching $540 million (KES 69.8 billion), driven by its operations in Ethiopia. Shareholders, including the Kenyan government, received a dividend of $0.009 (KES 1.20) per share, amounting to a KES 16.8 billion ($130.5 million) payout.
The government’s decision to divest more of its Safaricom stake could lead to increased private investment, fostering innovation and efficiency within the company. Additionally, changes in regulatory dynamics stemming from the reduced government shareholding may impact Safaricom’s operational strategies and collaborations with other entities.
As Kenya strives to position itself as a digital innovation hub in Africa, stakeholders across the continent will closely monitor the ownership evolution and strategic direction of Safaricom in the coming years.
