Selling Safaricom: Kenya's Debt Crisis and the "Fiscal Necessity"

Kenya is planning a significant move: selling off a portion of its 34.9% stake in Safaricom, the region's most profitable company. The government aims to raise $1.1 billion (KES149 billion) through this privatization push. Treasury Cabinet Secretary John Mbadi stated that the funds are intended to plug a hole in public finances and avoid imposing new taxes amid a tough economy. This planned transaction, expected before the end of the 2025/26 fiscal year, would be the government's biggest divestiture in nearly two decades.

The backdrop to this decision is Kenya's mounting debt burden. Total public debt stands at $88.5 billion (KES 11.4 trillion), having grown rapidly by $20.8 billion (KES 2.7 trillion) in under three years. Debt repayments are consuming a significant portion of government revenue; in the first eight months of a recent fiscal year, interest payments alone were $5.5 billion (KES 722 billion), more than half of the tax revenue raised. With tax revenues underperforming and little political appetite for more tax hikes, the sources describe selling stakes in profitable state assets like Safaricom as a "fiscal necessity" given limited financing options and rising debt costs.

However, Safaricom is a high-performing asset, posting an 11% rise in net profit to $540 million in 2024 and delivering $130.5 million in earnings to the Kenyan government through dividends. Its current stake is valued at $2.1 billion (KES280.5 billion).

Join us as we question the government's strategy: Is selling a valuable, revenue-generating asset like Safaricom truly the only path forward, a "fiscal necessity", when facing debt pressure and underperforming taxes? Or could other fiscal measures offer alternatives to divesting from a company that provides substantial earnings to the Treasury?