Kenya is preparing to undertake its largest privatization effort in nearly two decades, with plans to sell a significant portion of its 34.9% stake in Safaricom, East Africa’s telecom giant. The goal: raise approximately KES 149 billion ($1.1 billion) by June 2026 to plug widening budget gaps without imposing new taxes on an already strained economy.
This strategic move places Safaricom—arguably the crown jewel of Kenya’s corporate sector—at the center of the country’s fiscal recovery plan. With public debt exceeding KES 11.4 trillion ($88.5 billion) and interest payments set to surpass KES 1 trillion ($7.7 billion) by year-end, the government is racing to find non-tax revenue solutions. A successful Safaricom sale could offer the Treasury a critical lifeline.
Treasury Cabinet Secretary John Mbadi has acknowledged the stakes, stating, “There is talk that if we could offload more of our ownership of Safaricom, we are likely to get the KES 149 billion through privatization.” With tax collections falling short and inflation biting into household incomes, any attempt to raise taxes could face sharp public resistance.
This sale would mark the first significant divestiture in Safaricom since the government’s blockbuster 2008 IPO, which saw 10 billion shares snapped up by eager investors, generating KES 51.75 billion ($400 million) and achieving 532% oversubscription. But the circumstances today are markedly different.
Safaricom shares, currently trading at KES 19.90, are viewed by analysts as being undervalued relative to the company’s fundamentals. This presents both a risk and an opportunity. On one hand, the government could unlock value by selling to institutional investors at a premium through an off-market block transaction. On the other, a public offering at current prices could shortchange the Treasury and flood the market.
Indeed, Safaricom remains a highly attractive asset. Its continued dominance in mobile money through M-Pesa, combined with a strong data services portfolio, has turned the company into a consistent dividend payer. In the fiscal year ending March 2025, the firm reported a 7.2% profit growth to KES 45.7 billion and proposed a dividend of KES 1.20 per share—yielding KES 16.8 billion directly to government coffers.
Yet, the decision to sell comes with trade-offs. By reducing its stake, the government will forgo this annual dividend stream, exchanging long-term income for an immediate cash injection. It’s a classic short-term versus long-term dilemma, underscoring Kenya’s urgent fiscal position.
Adding complexity to the equation is Safaricom’s expansion into Ethiopia—Africa’s second most populous country. Since entering the market in 2022, the company has faced infrastructure challenges, regulatory hurdles, and currency volatility. Despite this, management remains confident, projecting a potential 50% earnings boost as the Ethiopian operation stabilizes.
For potential investors, this expansion represents either a calculated risk or an untapped growth market with enormous upside. International private equity firms have already shown keen interest in Africa’s telecom space, drawn by steady cash flows and scalable infrastructure.
Ultimately, the government faces a tightrope walk. Sell too quickly and risk underpricing the asset; wait too long and face rising debt pressures with limited alternatives. With the national budget pegged at KES 4.2 trillion, and tax revenues unlikely to close the gap alone, the Safaricom stake sale is shaping up to be both a fiscal necessity and a test of strategic timing.
