The Central Bank of Kenya (CBK) Governor Dr. Kamau Thugge has presented a compelling case for the government’s plan to sell a 15% stake in Safaricom PLC.
The Governor told lawmakers that the Divestment is a critical innovative financing mechanism designed to fund national infrastructure without sinking the country deeper into debt.
“Hon. Chair, we hold the view that overall, the Proposed Divestment of Safaricom PLC will have a positive macroeconomic impact. It will not only lead to increased foreign exchange reserves and exchange rate stability, but the additional fiscal space will reduce domestic borrowing and help sustain the reduction in domestic interest rates” he noted.
The proposal, outlined in Sessional Paper No. 3 of 2025, involves the Government of Kenya (Gok) reducing its shareholding in the telecommunications company from 35% to 20%.
This move would allow Vodafone Kenya Limited (VKL) to acquire a majority controlling stake, increasing its share from 40% to 55%. The transaction is expected to generate approximately KES 244.2 billion (US$1.88 billion), including upfront payments of future dividends.
Governor Thugge highlighted the dire fiscal constraints facing the country, noting that revenue performance is consistently below target with little room for new tax measures.
He emphasized that traditional funding sources, such as multilateral financing, are declining globally, while commercial debt remains prohibitively expensive.
“We welcome this innovative way of financing our infrastructure needs in areas such as roads, energy, water, and transport, without adding to our already high debt,” Dr. Thugge stated.
The governor further submitted that the move aligns with the government’s goal to reach a debt anchor of 55% NPV-of-debt relative to GDP, down from the 68.9% recorded in September 2025.
Beyond the budget, the CBK anticipates a significant boost to Kenya’s external position. The expected proceeds are projected to increase foreign exchange reserves from US$ 12,394 million (5.3 months of import cover) to US$ 14,280 million (6.2 months of import cover).
This influx of foreign direct investment is expected to stabilize the exchange rate and provide a buffer against external shocks, ultimately helping to contain imported inflation.
While assuring the lawmakers that the macroeconomic outlook is positive, the CBK undertook that its regulatory guardrails would remain firm.
The Governor further gave an assurance that if the transaction is ratified, the bank would enhance oversight over Safaricom.
“CBK’s oversight authority is not diluted by the change in ownership, and we will continue to apply enhanced oversight on Safaricom with enhanced reporting requirements being imposed due to M-Pesa’s systemic importance, and the increased concentration of ownership of Safaricom”, he assured the legislators.
