Kenya Plans To Privatise 35 State-Owned Companies Amid Economic Challenges.
By Caroline Ameh
In a bid to address financial strains, President William Ruto of Kenya has announced plans to privatise 35 state-owned enterprises, with further intentions to extend this initiative to an additional 100 firms. This move comes after the recent enactment of a revised law aimed at streamlining bureaucratic hurdles in the process.
During a gathering of African stock market officials in Nairobi, President Ruto emphasized, “We have identified the first 35 companies that we are going to offer to the private sector.”
The revised law, designed to facilitate the sale of state-owned enterprises to private entities, aims to boost the participation of the private sector in the economy, as highlighted by the presidency at the time of its signing.
Kenya’s last venture into privatisation occurred in 2008 with the issuance of an IPO for 25 percent of the shares in Safaricom, a telecommunications firm. Despite approving a list of 26 firms, including the Kenya Pipeline Company, Kenya Electricity Generating Company, and various banks for privatisation in 2009, no concrete steps have been taken since then.
The East African economic powerhouse is grappling with several challenges, including dwindling government finances, surging inflation, and a weakening currency that has substantially increased its debt repayment costs.
Acknowledging Kenya’s financial straits, the International Monetary Fund (IMF) recently approved a $938 million loan for the country, which is also facing a $2 billion Eurobond repayment next year. The IMF has urged the government to initiate reforms within public sector firms, especially Kenya Power and Kenya Airways, both of which suffered significant losses in 2022.
Additionally, the World Bank has announced its intention to provide Kenya, with a population of 53 million, with $12 billion in support over the next three years.
Kenya’s National Treasury figures indicate a staggering debt of more than 10.1 trillion shillings ($66 billion) by the end of June, approximately two-thirds of the country’s gross domestic product (GDP). These figures underscore the pressing need for strategic economic reforms and interventions.
