(NAIROBI, KENYA) – Kenyan taxpayers lost at least KES 14.3 billion after the National Treasury and the National Assembly ignored technical advice from a State think tank and pushed through the sale of Safaricom shares at a lower price. The loss is equal to about $88.4 million or £69.5 million.
The Kenya Institute of Public Policy and Research Analysis presented a policy memorandum on the partial divestiture to the National Assembly in January 2026. The document recommended a minimum price of KES 36.38 per share. The government was seeking to offload 15 percent, or 6,009,814,200 shares, of its 35 percent stake in Safaricom PLC. The recommended price is equal to about 22 US cents or 18 British pence per share.
KIPPRA is an autonomous public policy think tank and State corporation. It is mandated to provide data driven policy advice to the government. The agency was established in 1997 and formalised under the KIPPRA Act of 2006. It bridges the gap between scientific research and government policy and planning.
At the KIPPRA valuation, the sale would have earned the government KES 218.3 billion. This is equal to about $1.35 billion or £1.06 billion. The two government agencies disregarded the technical advice and settled on KES 34 per share. The sale raised KES 204 billion, a difference of KES 14.3 billion. The final price is equal to about 21 US cents or 17 British pence per share.
KIPPRA’s expert advice was presented to a joint sitting of the National Assembly’s Finance and National Planning Committee chaired by Molo MP Kuria Kimani and the Public Debt and Privatisation Committee chaired by Balambala MP Abdi Shurie.
The presentation was made before the two committees began stakeholder engagement on the proposed partial divestiture as required under Sessional Paper No. 3 of 2025. The Sessional Paper was tabled in the National Assembly on 4 January 2025 and committed to the two committees for joint processing.
The committees engaged KIPPRA to evaluate the economic rationale, valuation, structure and long term implications of selling the State’s stake in Safaricom, one of Kenya’s most profitable companies. KIPPRA recommended that the National Treasury set the minimum selling price at KES 36.38 and negotiate for a higher selling price or subject the process to competitive bidding. The agency said the figure was arrived at after extensive analysis. It noted that the proposed selling price of KES 34 was slightly below its KES 36.38 valuation.
The sale also saw the government receive KES 40.2 billion in lieu of future dividends on the residual 20 percent shareholding in the telecommunications company. This is equal to about $248 million or £195 million. The total proceeds came to KES 240.2 billion, equal to about $1.49 billion or £1.17 billion. The government said the money would be used to fund critical infrastructure projects.
The two committees adopted the lower price in their joint report to the House recommending approval of the divestiture. KIPPRA is not mentioned anywhere in the committee’s 122 page report among the stakeholders who appeared before the committees. Its recommendations were also not captured in the report to guide government decision making.
KIPPRA had raised serious concerns about the proposed divestiture. These included possible exposure to future fiscal deficits, foreign exchange pressures, market integrity issues and inadequate disclosure on the specific projects to be funded with the proceeds. The think tank questioned the government’s long standing position that the sale would ease the burden on the Exchequer of financing critical infrastructure projects.
The think tank warned that the government could forgo more than KES 1.2 trillion in dividends over the next 30 years as a result of the divestiture. This is equal to about $7.4 billion or £5.8 billion. KIPPRA said the forgone dividends would be much higher than the KES 204 billion received. While the sale would expand fiscal space in the short term, that space would be limited in future, potentially exposing the government to fiscal deficits.
The committee report shows that the National Treasury enlisted KCB Investment Bank in November 2025 to undertake an independent valuation of Safaricom shares. The joint report adopted by the House said the proposed offer price of KES 34 per share was arrived at using various assumptions, projections and weightings applied across different valuation methodologies. The committee said the negotiated price reflects a premium above historical market trading levels and aligns with subsequent market movements. This mitigated concerns about potential undervaluation.
KIPPRA had also recommended that the sale be conducted through competitive bidding in line with Section 34(b) of the Privatisation Act. Under this method, the government offers shares to a bidder who meets the tender criteria. The think tank said this would help the government secure higher returns. It warned that selling the shares to Vodacom Group without competitive bidding raised transparency concerns.
KIPPRA said there is limited public information on the process used to select the buyer for the government. Vodacom, through Vodafone Kenya Limited, was already a shareholder. The available reports do not indicate whether the selection followed a competitive or tendered process, or if alternative buyers were considered.
Treasury Cabinet Secretary John Mbadi defended the choice of Vodacom. He said the proposed buyer was a long standing investor in Safaricom, holding about 40 percent through Vodafone Kenya. The company had deep regional experience and a track record in capital investment, digital infrastructure, innovation and financial inclusion. Mbadi said the increased stake would reinforce Safaricom’s competitiveness and growth trajectory.
The law provides for several methods of privatisation. These include an initial public offering of shares, sale of shares by public tender, sale resulting from the exercise of pre-emptive rights or other methods determined by the Cabinet. The joint committee said negotiating with an existing strategic shareholder minimises execution risk, preserves market confidence and avoids potential governance instability that may arise from introducing a new controlling or influential shareholder.
The committee also observed that alternative disposal methods including a public offering or cross listing could have introduced additional market volatility, currency risks and potential downward pressure on the share price because of increased supply in the market.
KIPPRA argued that common stock represents an ownership interest in a business and carries a claim on future cash flows. Discounted cash flow valuation models provide the foundation for securities valuation by treating the intrinsic value of common stock as the present value of expected future cash flows.
The document shows that although the government will receive KES 240.2 billion in immediate revenue to fund infrastructure investments, it will forgo annual dividends of about KES 7.2 billion in the short term. This is equal to about $44.5 million or £35 million. The figure is based on the most recent dividend per share of KES 1.20 for the 6,009,814,200 shares sold. The shares had been generating income for the government and helping fund budget activities.
KIPPRA said that over the past decade, Safaricom’s earnings per share growth averaged 8.7 percent. The dividend payout ratio averaged 77.8 percent. Assuming the same earnings growth and dividend payout ratios are maintained, the dividends foregone on the 15 percent stake over the next 30 years would amount to KES 1.2 trillion in nominal and present value terms.
The figure is projected at KES 121.89 billion between 2025 and 2034. This is equal to about $753 million or £592 million. It is projected at KES 280.72 billion between 2035 and 2044, equal to about $1.73 billion or £1.36 billion. The figure is KES 745.92 billion between 2045 and 2055, equal to about $4.61 billion or £3.63 billion.
In nominal terms, KIPPRA said the KES 1.2 trillion in dividends foregone over the next 30 years, excluding capital gains, would be substantially higher than the KES 204 billion received from the sale. The sale expands fiscal space in the short term but will limit it in future and may increase the fiscal deficit. The government would need to sustain efforts to reduce the deficit including enhancing revenue collection.
KIPPRA also said the sale could have implications for the exchange rate and foreign exchange reserves. At the current shareholding of 40 percent, Vodafone Kenya holds 16 billion shares. These translate to about KES 19.2 billion in dividends at the recent dividend per share of KES 1.20. This is equal to about $119 million or £93 million.
If the shareholding by Vodafone Kenya rises to 55 percent, or about 22.04 billion shares, the dividends paid to it would increase to about KES 26.4 billion. This is equal to about $163 million or £128 million. KIPPRA warned that as the additional dividends are repatriated to Vodacom Group’s parent company, the increased outflow could put pressure on the Kenya shilling and foreign exchange reserves.
KIPPRA said the foreign currency related pressure may devalue the shilling. A large portion of Kenya’s external debt, KES 5.7 trillion, is denominated in US dollars. This is equal to about $35.2 billion or £27.7 billion. It accounted for 59.8 percent of overall external debt in 2024/25. Depreciation of the shilling against the US dollar would mean more shillings would be needed to buy the foreign currency required to meet principal and interest repayments.
KIPPRA also warned that the interests of Safaricom’s minority shareholders may have been overlooked in the sale. This raises concerns about market integrity and investor fairness. Safaricom has 533,549 shareholders, with institutional and retail investors holding significant stakes. Institutional shareholders own about 1.9 billion shares, equivalent to 4.8 percent. Retail investors own about 8.2 billion shares, or about 20 percent.
These investors collectively form a significant shareholder base. KIPPRA said they had not been given sufficient notice and information to make informed decisions. This limited their ability to anticipate or hedge against the effects of ownership dilution and changes in the company’s strategic direction.
KIPPRA said a phased IPO style approach would have been considered for the partial divestiture of Safaricom, which is a strategic and listed company. In listed strategic companies, a phased IPO style approach maximises transparency, protects retail investors and preserves market integrity. Departing from the model increases perception risks even where transactions are procedurally compliant.
The agency said the government divestment of Safaricom shares with the partially disclosed transaction will increase information asymmetry and reduce investor inclusivity. Minority shareholders had no opportunity to participate in the acquisition. This led to a concentration of ownership without inclusive access, with institutional and retail investors relegated to passive observers.
KIPPRA said the Safaricom transaction preserves minority shareholders’ legal and economic rights. But it falls short of best practice standards on procedural fairness, predictability and equal access. These are key parts of minority protection in strategic listed companies.
KIPPRA also pointed out that Safaricom is not merely a profitable company generating recurring returns. It is a strategic asset that facilitates digital financial inclusion and underpins national payments infrastructure. The company processes about KES 111 billion in financial transactions daily through M-Pesa based on September 2025 data. This is equal to about $686 million or £540 million. The company also maintains the largest share of Kenya’s mobile money market with 89.7 percent of subscriptions.
The agency noted that the Sessional Paper largely focused on the existence and value of the sale, its fiscal justification and compliance with legal and regulatory requirements. But it does not state why the option of partial divestiture is the best alternative. Beyond the broad statement that the proceeds would be used to support infrastructure development, KIPPRA said there was no clarification of the specific projects to be funded or mechanism for ensuring that the proceeds would be tracked and outcomes reported.
KIPPRA said this reduces the perceived legitimacy of the sale.