A Safaricom Sale, A Nervous Shilling, And A Central Bank Choosing Arithmetic Over Symbolism
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, manage liquidity, and safeguard market confidence. When they step beyond that lane, it is usually because something structural is shifting in the background. This is the context in which the Central Bank of Kenya (CBK) has backed the government’s partial divestiture plan.
The CBK supports this divestiture not as a “market flourish,” but as a pragmatic tool to plug a fiscal gap that has become stubborn and politically awkward. By September 2025, Kenya’s public debt stood at KSh 12,054 billion, roughly 68.9% of GDP. Domestic borrowing has leaned heavily on local markets, pushing interest rates up and narrowing the space for private credit. Meanwhile, external borrowing has grown expensive as concessional funding thins. In this setting, selling a slice of an existing asset looks less like a “finance trick” and more like a necessary 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 of Selling Without Borrowing
The government plans to reduce its stake in Safaricom by 15%, lowering its ownership from 35% to 20%. The expected proceeds are approximately KSh 244.2 billion (roughly US$1.88 billion) when future dividend payments are included upfront. These funds are earmarked for existing budget projects, primarily in roads, water, energy, and transport.
The CBK is not reacting to Safaricom itself, but to the financing methodology. The bank has been explicit that traditional options are constrained: commercial debt is costly, and domestic borrowing “crowds out” private lending. Furthermore, cutting recurrent spending is politically fraught when wages, debt service, county transfers, and social sectors consume the bulk of the budget.
In this landscape, asset sales allow the government to fund development spending without pushing debt ratios further from the 55% Net Present Value (NPV) debt anchor. It is not an elegant solution, but it is a legible one.
Foreign Reserves: The Quiet Subtext
Behind the fiscal argument sits a secondary concern: foreign exchange reserves. Kenya’s reserves stood at US$12,394 million in 2025, covering about 5.3 months of imports. This divestiture is expected to add around US$1,577 million in direct inflows, plus US$309 million from upfront dividend payments. All else being equal, reserves could rise to US$14,280 million, or 6.2 months of import cover.
This buffer matters more than the public debate suggests. Reserves dampen exchange rate swings, soften imported inflation, and provide a cushion against hostile global conditions. The CBK’s backing is, in part, a defensive move; it prefers a significant upfront inflow today to a fragile balance sheet tomorrow.
Safaricom, M-Pesa, and Regulatory Nerves
Any sale involving Safaricom triggers regulatory anxiety for one primary reason: M-Pesa. The platform holds customer funds exceeding KSh 250 billion in trust accounts and underpins daily transactions across the economy. The CBK treats it as “systemically important,” meaning its failure would ripple far beyond the telecommunications sector.
Consequently, the CBK’s support is conditional. A change in ownership—especially one that raises Vodafone Kenya Limited’s stake from 40% to 55%- demands scrutiny. The bank has requested clarity on governance, funding sources, operational continuity, and the insulation of customer funds from group-level stress.
This is where the endorsement becomes complex. The CBK supports the divestiture while simultaneously insisting on enhanced oversight. Reporting requirements are likely to tighten, and cross-border supervisory cooperation will deepen. The regulator is guarding local decision-making autonomy with unusual emphasis. The tension is clear: the state wants cash, while the regulator wants to ensure the payment system remains stable and dependable.
Interest Rates and the “Crowding-Out” Problem
A quieter argument in favor of divestiture lies 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, easing pressure on yields.
Lower yields eventually feed through to commercial lending rates. Currently, credit to firms is constrained not only by risk aversion but by the sheer volume of government paper competing for bank balance sheets. The CBK’s view is that reduced government borrowing creates the necessary “breathing room” for private sector activity.
Political Ownership vs. Economic Pragmatism
Asset sales are never purely technical. Safaricom carries immense symbolic weight; it is profitable, visible, and entwined with daily Kenyan life. Reducing state ownership invites accusations of “selling the family silver,” even if the state remains a significant shareholder.
The CBK has chosen pragmatism over symbolism. Its framing avoids triumphalism, instead stressing constraints. The message is almost weary: options are limited, and this path causes less damage than the alternatives. By grounding its support in macroeconomic stability, the bank sidesteps ideological battles and anchors the decision in balance sheets and flows.
Conclusion: What Happens After the Cash Lands?
The harder questions will arise after the proceeds are booked. Using the funds for approved projects is sensible, but execution is everything. Delays, cost overruns, or the diversion of funds into recurrent spending would weaken the argument that divestiture is “cleaner” than borrowing.
There is also a “precedent risk.” Once asset sales are normalized, future governments may reach for them more readily, potentially hollowing out public ownership without addressing underlying revenue weaknesses.
For now, the CBK is betting that a one-off inflow will strengthen reserves, steady the currency, and ease fiscal pressure at a delicate moment. It isn’t a matter of romance; it is a matter of arithmetic. And in a period where arithmetic has become unforgiving, that is reason enough
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