Why the Safaricom Stake Sale Budget Could Reshape Kenya’s 2025 Fiscal Strategy

As Kenya prepares to roll out its Sh4.24 trillion national budget for the 2025/26 fiscal year, the government is placing a strategic bet on a high-profile divestment: the Safaricom stake sale. With limited space for additional taxes and a decline in donor grants, Treasury is now leaning heavily on privatisation to support its fiscal goals.

The proposed sale of a 10 percent government stake in Safaricom forms a central part of the Safaricom stake sale budget plan. The Treasury aims to raise up to Sh149 billion from the broader privatisation drive, with Safaricom and Kenya Pipeline Company (KPC) flagged as key contributors.

The state currently owns 35 percent of Safaricom, valued at about Sh334 billion. A sale of 10 percent — approximately 4 billion shares — at the prevailing Nairobi Securities Exchange (NSE) price of Sh23.85 would bring in nearly Sh95.6 billion. The government’s stake would reduce to 25 percent, the same level it retained after the 2008 IPO that offloaded 25 percent to investors.

If the shares are sold to a strategic investor rather than through the open market, the sale could fetch a premium, further boosting revenues under the Safaricom stake sale budget.

Why Safaricom?

Safaricom remains one of Kenya’s most profitable companies and the largest firm on the NSE by market capitalization. Its track record of dividend payments and stable earnings makes it an attractive asset to investors.

Its inclusion in the 2025/26 privatisation plan provides the Treasury with a strong, market-ready option for unlocking capital without resorting to new borrowing or unpopular tax hikes. As part of the Safaricom stake sale budget, the transaction is expected to deliver a timely inflow of funds to help bridge a projected Sh876.1 billion budget deficit.

Other Strategic Assets in the Pipeline

Together with Safaricom, the government is prepping the Kenya Pipeline Company for sale. Fully owned by the government, KPC made a net profit of Sh6.87 billion for the year ending June 2024, up 52.6 percent from its Sh4.5 billion net profit of the previous financial year. With its assets and steady revenue flows, KPC is thus deemed a low-hanging fruit on the 2023 privatisation roadmap.

New Kenya Co-operative Creameries, Rivatex East Africa, National Oil Corporation of Kenya, and Kenya Seed Company are also listed for sale. But then, most of these entities require deeper restructuring and may never bring quick cash as envisaged in the Safaricom stake sale budget.

Fiscal Constraints Driving Asset Sales

The 2025/26 budget expects total revenues, including taxes and appropriations-in-aid, to reach Sh3.32 trillion — an 8.12 percent increase over the previous year. Ordinary revenue, mainly from taxes, is projected at Sh2.76 trillion. With pressure from rising debt service obligations and limited borrowing room, non-tax revenue options such as privatisation have gained urgency.

The Safaricom stake sale budget approach fits into the Treasury’s broader strategy of reducing reliance on loans while maintaining essential spending levels. Grants are expected to drop to Sh46.9 billion, down from Sh52.6 billion in the current fiscal year, further tightening available resources.

Challenges Ahead

Despite the strong fiscal rationale, privatising high-profile assets faces challenges. Past attempts have been delayed by legal disputes, valuation disagreements, and political resistance. Transparency, public interest, and the timing of transactions will be critical in determining how much Kenya can raise from the Safaricom stake sale budget initiative.

If successful, this move could mark a shift in Kenya’s approach to public asset management, transitioning from long-standing ownership to targeted, strategic divestments in the interest of economic stability.

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