Safaricom, foreign reserves, and a central bank stepping into a fiscal corner it usually avoids
A central bank that usually stays above politics is choosing to speak plainly about money running out of easy options
Central banks rarely volunteer opinions on how governments should raise money. They police inflation, mind liquidity, and worry about confidence. When they step beyond that lane, it is usually because something structural is happening in the background. That is the context in which the Central Bank of Kenya has backed the partial divestiture plan. CBK supports partial divestiture not as a market flourish, but as a way to plug a fiscal gap that has become stubborn and politically awkward.
Kenya’s public debt stood at KSh 12,054 billion by September 2025, roughly 68.9 percent of GDP. Domestic borrowing has leaned hard on local markets, pushing rates up and narrowing space for private credit. External borrowing has grown more expensive, while concessional funding has thinned. In that setting, selling a slice of an existing asset starts to look less like a finance trick and more like a release valve.
The central bank’s endorsement matters because it reframes the divestiture as a macroeconomic instrument rather than a one-off sale.
The logic behind selling without borrowing
The government plans to reduce its stake in Safaricom by 15 percent, lowering ownership from 35 percent to 20 percent. The expected proceeds are about KSh 244.2 billion, or roughly US$ 1.88 billion when future dividend payments are included upfront. That cash is earmarked for projects already sitting in the budget, mainly in roads, water, energy, and transport.
What CBK is reacting to here is not Safaricom itself. It is the financing method. The bank has been explicit that traditional options are constrained. Commercial debt is costly. Domestic borrowing crowds out private lending. Cutting recurrent spending is politically near impossible when wages, debt service, county transfers, and social sectors swallow much of the envelope.
In that landscape, asset sales function as a way to fund development spending without pushing debt ratios further away from the 55 percent NPV-of-debt anchor. It is not elegant, but it is legible.
Foreign reserves as the quiet subtext
Behind the fiscal argument sits another concern. Foreign exchange reserves. Kenya’s reserves stood at US$ 12,394 million in 2025, covering about 5.3 months of imports. The divestiture is expected to add around US$ 1,577 million in direct inflows, plus about US$ 309 million from upfront dividend payments. Other things held constant, reserves could rise to around US$ 14,280 million, or 6.2 months of import cover.
That buffer matters more than public debate suggests. Reserves dampen exchange rate swings, soften imported inflation, and give policymakers time when global conditions turn hostile. CBK’s backing of the divestiture reads, in part, as a defensive move. It prefers an upfront inflow today to a fragile balance later.
There is also a subtle institutional angle. A central bank that worries about reserve adequacy tends to favour instruments that buy breathing room, even if they sit outside its usual toolkit.
Safaricom, M-Pesa, and the regulatory nerves
Any sale involving Safaricom triggers regulatory anxiety for one reason. M-Pesa. The platform holds customer funds exceeding KSh 250 billion in trust accounts and underpins daily transactions across the economy. CBK treats it as systemically important, meaning failure would ripple far beyond telecoms.
That is why CBK’s support is conditional. A change in ownership, especially one that raises Vodafone Kenya Limited’s stake from 40 percent to 55 percent, demands scrutiny. The bank has asked for clarity on governance, funding sources, operational continuity, and the insulation of customer funds from group-level stress.
This is where the endorsement becomes more complicated. CBK supports partial divestiture, yet insists on enhanced oversight. Reporting requirements are likely to tighten. Cross-border supervisory cooperation will deepen. Local decision-making autonomy is being guarded with unusual emphasis.
The tension is obvious. The state wants cash. The regulator wants assurance that the payment system remains intact, boring, and dependable.
Interest rates, credit, and the crowding-out problem
One of the quieter arguments in favour of the divestiture sits in the interest rate channel. If the government raises KSh 244.2 billion without tapping domestic markets, it can reduce its reliance on Treasury bills and bonds. That eases pressure on yields.
Lower yields feed through to lending rates with a lag. Credit to firms has been constrained not only by risk aversion, but by the sheer volume of government paper competing for bank balance sheets. CBK’s view is that less government borrowing leaves room for private activity to breathe again.
There is no automatic outcome here. Banks do not lend simply because rates fall. But the direction of travel is clear enough to make the central bank comfortable with the trade-off.
Political ownership versus economic pragmatism
Asset sales are never purely technical. Safaricom carries symbolic weight. It is profitable, visible, and entwined with daily life. Reducing state ownership invites accusations of selling family silver, even when the state remains a significant shareholder.
CBK has chosen pragmatism over symbolism. Its framing avoids triumphal language. It stresses constraints, not ambition. The message is almost weary: options are limited, and this one causes less damage than the alternatives.
That posture also protects the bank. By grounding its support in macro stability, it sidesteps ideological battles about ownership while anchoring the decision in balance sheets and flows.
What follows after the cash lands
The harder questions begin after the proceeds are booked. Using the funds for projects already approved is sensible, but execution will matter. Delays, cost overruns, or diversion into recurrent spending would weaken the argument that divestiture is cleaner than borrowing.
There is also precedent risk. Once asset sales become normalised, future governments may reach for them more readily. That could hollow out public ownership without addressing underlying revenue weaknesses. CBK’s support today does not bind it tomorrow, but it does set a tone.
For now, the bank is betting that a one-off inflow strengthens reserves, steadies the currency, and eases fiscal pressure at a delicate moment. It is not romance. It is arithmetic.
And in a period where arithmetic has become unforgiving, that may be reason enough.
[Secure Your Seat at Africa Tech Summit Nairobi 2026 | February 11–12 here] Use code TTRENDS10 at checkout to save 10% on your pass and join the leaders building Africa’s $1 trillion cross-border payment future.
Go to TECHTRENDSKE.co.ke for more tech and business news from the African continent.
Follow us on WhatsApp, Telegram, Twitter, and Facebook, or subscribe to our weekly newsletter to ensure you don’t miss out on any future updates. Send tips to editorial@techtrendsmedia.co.ke
