The Treasury has included Sh149 billion from the sale of State-owned firms in the budget for the year starting July, kicking off the long-delayed privatisation drive.
The proceeds from the sale of stakes in the firms will back the Sh3.3 billion revenues from taxes and ministerial levies for funding the total expenditure at about Sh4.2 trillion, which is before parliament for debate and approval.
Initially, the State had earmarked 11 firms, including Kenya Pipeline, Kenyatta International Conference (KICC) and New KCC, from among more than 35 companies that are slated for sale to partially help the government raise revenue in the face of growing debt repayments.
This emerges in a period when the government has opted not to impose new taxes or increase existing ones in budget proposals for the year starting July after deadly protests broke out last year against the government’s measures to raise revenue.
The Treasury reckons that it is working on a longer list of firms that will be privatised beyond the 11 whose sale was frozen by the courts, setting the stage for a mega auction of government-owned companies.
The director-general for Budget, Fiscal and Economic Affairs at the Treasury, Albert Mwenda, told the Business Daily that part of the proceeds from the sale will be used in reforming parastatals and settling supplier arrears of state-owned corporations.
“Yes, there were 11 State-owned enterprises (SOEs) that had been earmarked (for privatisation), but those ones have been delayed through a court process. Of course, that is a matter that is being handled in a different directorate, as we only have to, after consulting with them, to include in our plans,” said Mr Mwenda.
“What I know is that there are plans that may not have been fully processed through necessary approvals, but the information we have from the director of public investments is that they are considering, they are processing some companies for privatisation.”
Kenya last privatised a State-owned company in 2008 with an initial public offering of a 25 percent stake in telecommunications firm Safaricom.
The sale of the firms through the Nairobi bourse could help end the listing drought in a market that has witnessed the exit of blue-chip companies, such as KenolKobil, over the past decade.
Previously, the government had targeted profitable companies for privatisation, including Kenya Pipeline and parts of the Kenya Ports Authority (KPA).
The government is also keen on selling hotels, including Kabarnet, Mt Elgon Lodge, Golf Hotel, Sunset, Kenya Safaris lodges and stakes in Hilton Group of Hotels, InterContinental Hotels Corporation and Mountain Lodge Limited.
Consolidated Bank, Development Bank, Kenya Meat Commission and Kenya Cooperative Creameries were also targeted for sale.
The Privatisation Commission planned further divestiture from KenGen, Kenya Wines Agencies and Portland Cement.
The Nairobi Securities Exchange (NSE) had previously lobbied the government to cut its stake in key listed companies to as low as 10 percent in its latest bid to bring in new investors.
The bourse made proposals for the Treasury to cut government ownership in companies such as Safaricom (35 percent), KCB Group (19.7 percent) and Kenya Re-Insurance (60 percent), which have room for additional re-issuance of shares.
The listing of additional shares of State-owned corporations will end the nearly 10-year IPO drought at the NSE that has lasted since October 2015, when the Stanlib Fahari REIT was listed.
No State-owned firm was sold at the NSE during the 10-year tenure of President Uhuru Kenyatta.
Former President Kibaki privatised six companies, including KenGen, Kenya Reinsurance, Safaricom and Mumias Sugar through the NSE between 2003 and 2008.
He sold Telkom Kenya shares through a strategic sale and leased out Kenya Railways Corporation through a concessionaire.
Three of the dominant firms at the NSE — Safaricom, Equity and Co-operative Bank — came into the market during the IPO boom years of 2005 to 2009.
Their dominance has made it difficult for investors to measure the true performance of the bourse due to the companies’ outsized influence on key market indicators.
The government revised the law governing the sale of State-owned companies in 2023 to eliminate bureaucracy that had made the process grind to a halt.
This year, it has refrained from aggressive tax-raising measures in the Finance Bill, 2025 and instead is leaning towards sealing leakages to avoid a repeat of youth-led protests that met last year’s tax hikes.
The freeze on taxes makes fundraising plans such as the sale of stakes in State-owned firms critical.
