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 plans to reduce its stake in Safaricom, the country’s largest telecom operator, as part of a broader strategy to raise KSh149 billion ($1.16 billion) in the 2025/26 financial year through the sale of stakes in various state-owned companies. Given Safaricom’s central role in the country’s digital ecosystem, this move could significantly impact Kenya’s tech and telecom sectors.
Kenya’s decision to offload more of its Safaricom shares is largely driven by the burden of soaring debt repayments. Between July 2023 and February 2024, the country spent about $5.5 billion (KES 722 billion) solely on interest, over half of its total tax income of $10.8 billion (KES 1.4 trillion) during that time. With projections showing interest payments could surpass $7.7 billion (KES 1 trillion) by the end of the year, the growing debt servicing bill is tightening fiscal space and prompting urgent revenue-generating measures.
Safaricom remains a magnet for investor interest, thanks in large part to the success of its mobile money service, M-PESA. In 2024, the telecom giant reported an 11% increase in net earnings, reaching $540 million (KES 69.8 billion), buoyed by gains from its operations in Ethiopia. Shareholders were rewarded with a dividend of $0.009 (KES 1.20) per share, translating to a KES 16.8 billion ($130.5 million) payout for the Kenyan government.
The government’s decision to divest more of its stake in Safaricom could have several implications for the tech and telecom sectors. A reduced government stake may encourage more private investment, potentially leading to increased innovation and efficiency within the company.
Also, with the government holding a smaller share, shifts in regulatory dynamics may affect how Safaricom operates and collaborates with other entities.
As Kenya continues to position itself as a hub for digital innovation in Africa, stakeholders across the continent will closely watch the evolution of Safaricom’s ownership and subsequent strategies.
