Grace Ashiru
Kenya’s government has announced plans to reduce its ownership in Safaricom, the country’s largest telecom operator and a key pillar of its digital economy. This move forms part of a broader strategy to raise KSh149 billion ($1.16 billion) during the 2025/26 fiscal year through the sale of stakes in various state-owned enterprises.
Debt Pressures Drive Divestment
The decision comes amid mounting debt servicing costs that are increasingly squeezing Kenya’s fiscal space. From July 2023 to February 2024, Kenya paid approximately $5.5 billion (KES 722 billion) in interest — more than half of its total tax revenues during the same period. Projections indicate interest payments could exceed $7.7 billion (KES 1 trillion) by the end of 2025, compelling the government to explore new revenue streams.
Safaricom: A Lucrative Asset
Safaricom remains a highly attractive asset, largely due to the sustained success of its mobile money platform, M-PESA. The company posted an 11% rise in net earnings in 2024, hitting $540 million (KES 69.8 billion), supported by strong performance in Ethiopia. The government earned a dividend payout of KES 16.8 billion ($130.5 million) from its existing shareholding.
Implications for Kenya’s Tech and Telecom Landscape
Reducing the government’s stake in Safaricom could catalyze several sectoral shifts:
- Boost to Private Investment: A smaller public ownership share may attract increased private capital, potentially fostering greater innovation, operational efficiency, and competitiveness within Safaricom.
- Regulatory Dynamics: A diminished government presence might lead to changes in regulatory oversight and influence, impacting Safaricom’s collaborations and market behavior.
- Market Confidence: The divestment signals confidence in Kenya’s capital markets and state-owned enterprise reforms, encouraging broader investor participation in the country’s digital economy.
Looking Ahead
As Kenya continues to position itself as a regional digital innovation hub, Safaricom’s evolving ownership structure will be closely watched by investors, regulators, and industry players alike. The government’s move to monetize assets to manage debt presents both challenges and opportunities for the telecom sector and the wider tech ecosystem.
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