CBK backs plan to sell 15% safaricom stake to fund infrastructure

Central Bank of Kenya (CBK) Governor Dr. Kamau Thugge has defended the government’s proposal to sell a 15 per cent stake in Safaricom PLC, describing it as an innovative financing option aimed at supporting infrastructure development without increasing public debt.

Appearing before lawmakers, Dr. Thugge said the proposed divestiture would have a positive macroeconomic impact, including boosting foreign exchange reserves, stabilising the shilling and easing pressure on domestic borrowing.

“We hold the view that overall, the proposed divestiture of Safaricom PLC will have a positive macroeconomic impact. It will increase foreign exchange reserves and enhance exchange rate stability, while the additional fiscal space will reduce domestic borrowing and help sustain lower interest rates,” he said.

The proposal is contained in Sessional Paper No. 3 of 2025 and would see the Government of Kenya reduce its shareholding in Safaricom from 35 per cent to 20 per cent. Vodafone Kenya Limited would increase its stake from 40 per cent to 55 per cent, giving it a majority controlling interest.

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The transaction is expected to raise about Ksh 244.2 billion including upfront payments on future dividends.

Dr. Thugge cited mounting fiscal pressures, noting that revenue collection has remained below target while options for new taxes are limited. He added that multilateral financing is shrinking globally and commercial borrowing has become increasingly expensive.

“This approach allows us to finance critical infrastructure in roads, energy, water and transport without adding to our already high debt levels,” he said.

He noted that the move supports the government’s fiscal consolidation strategy, including its target of reducing public debt to a 55 per cent net present value (NPV) of GDP, down from 68.9 per cent recorded in September 2025.

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CBK estimates that the proceeds from the sale would raise Kenya’s foreign exchange reserves from US$12.39 billion (5.3 months of import cover) to US$14.28 billion (6.2 months), strengthening the country’s external position and cushioning the economy against external shocks.

The increased inflow of foreign direct investment is also expected to help stabilise the exchange rate and contain imported inflation.

“CBK’s oversight authority is not diluted by the change in ownership. We will continue to apply enhanced supervision, including stricter reporting requirements, due to M-Pesa’s systemic importance and the increased concentration of ownership,” he said.

Dr. Thugge assured legislators that CBK’s regulatory oversight would remain intact despite the ownership changes at Safaricom, particularly given the systemic importance of M-Pesa.

By Obegi Malack

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