Sale of strategic assets, infrastructure fund offer new fodder for Ruto critics

The sale of key government assets and the proposed establishment of a National Infrastructure Fund (NIF) appear to give President William Ruto’s opponents a critical arsenal to poke holes in his economic policies.

With the privatisation of the Kenya Pipeline Company (KPC) now completed and trading at the stock market expected to start on March 9, 2026, focus is now turning to the Safaricom divestiture. 

The government hopes to raise Sh244.5 billion through the sale of a 15 per cent stake to South Africa’s Vodacom, which is owned by UK’s Vodafone.

The funds, as is the case with the about Sh106 billion raised from KPC privatisation, will be used to plug budget holes for the current financial year but also as seed capital for the Sh5 trillion National Infrastructure Fund and the Sovereign Wealth Fund.  

President Ruto has defended the sale but also insisted that the NIF is necessary to ensure that proceeds are put to good use unlike in the past where proceeds of IPOs that were wildly successful would end up “paying salaries and debts, leaving no enduring national assets behind”.

Politicians from the united opposition are however traversing the county, with the sale of Safarcom and the approach taken in setting up the National Infrastructure Fund being among the issues they are using to explain to Kenyans why President Ruto does not deserve a second term. And the citizens appear to be biting. 

“Safaricom is such a dear company to this country and the government has offered it for sale to Vodacom. The government is engaging what they are calling public participation in a way to try and get an endorsement to go ahead with the transaction out of the law,” said Tony Gachoka, the spokesperson for Kanu.

“The Safaricom sale is suspicious because the buyer was single sourced and no other person was aware that it was going to be sold.”

“The most worrying aspect is the M-Pesa component aspect of the company. When it was first licensed in Kenya, it was seen as a telco but then they launched M-Pesa and today we look at it as a telco and other services it offers such as data but we need to have a special look into the value of M-Pesa for Safaricom.”

Other than being the largest mobile network operator, the firm's mobile money service M-Pesa has been critical in expanding financial inclusion. M-Pesa has emerged as key in Kenya’s payment systems and at one point Treasury flagged mobile money, noting that being deeply integrated in Kenya’s economy, its failure could significantly disrupt the economy.

Owing to the success of mobile money, various financial products have been leveraged on this payment channel increasing the inter linkages between this technology and the banking sector,” said Treasury in past budget documents, explaining the the Government is also using the technology to provide services and receive payments online using products such as the IFMIS, i-Tax, e-procurement, Huduma centres and e- citizen. 

“If this system were to be compromised through cybercrime, fraud and the disruption of the mobile money, it would lead to data corruption and substantial loss of potential Government revenue, customer deposits and market confidence. The Government might therefore be under pressure to compensate for losses and hence should be considered as a plausible fiscal risk,” said the Treasury at the time.

According to Gachoka, this shows M-Pesa has reached a point where it can be termed as the central nervous system of the Kenyan economy.

“All this has become part of the socio-economic life of Kenyans to the extent that Safaricom has become more than a phone app – it is a source of savings, it has biome a global transmitter of money for people in the diaspora. Through M-Pesa, you also have access to financial services without necessarily having bank accounts,” said Gachoka. 

“When you look at the sale as proposed by the government, there is something about Safaricom that is beyond sale and giving it to a foreigner who will in effect have 55 per cent holding of Kenya Safaricom – the biggest social economic unit for Kenya – is unacceptable.”

Gachoka, together with Fred Onyango have filed a case in court seeking to stop the transaction, arguing lack of public participation in the process that led to the transaction as well as concerns over the valuation of the company that resulted in the government selling a share at Sh34. The duo has also questioned the procurement of transaction advisors and want the court to compel Safaricom to produce the documents in courts.

The duo also argues that Safaricom is a strategic national asset and 55 per cent control by Vodacom would threaten Kenya’s data security and control over M-Pesa.

There has however been a twist in the case, when Vodacom urged the court to strike its name out of the case. It has been listed as seventh respondent in the suit.

The case is still in court, which is expected to make a decision on March 12  on the consolidation of multiple cases that had been filed by different parties into one super case.

Gachoka’s team had also requested that the case be heard by a three bench judge, arguing huge public interest and what he termed as complex constitutional questions.

Gachoka further faults the manner in which the government is implementing the National Infrastructure Fund. 

“The infrastructure fund as proposed by Ruto is an illegal entity that seeks to seek money outside the consolidated fund and outside the rail guards of Parliament and scrutiny of AG and Controller of Budget,”

“The idea is that there is a fund run from state house, collected from selling public assets and going, not through the scrutiny of parliament, but going to the executive to decide what to do with it.”

“We have a situation where when funds come to the consolidated fund,they are constricted by several constitutional requirements – how much goes to the central government, how much goes to devolution.Any attempt to raise money outside that process is unconstitutional. 

Gachoka’s sentiments are echoed by other opposition leaders. While traversing the country last week and addressing Kenyans in different towns, United Opposition leaders said President Ruto's determination to privatize public-owned companies was in a manner they said would benefit only a few people.

Kalonzo Musyoka, Wiper Party leader, said the selling of the State's stake in Safaricom was ill-advised and was likely to disadvantage taxpayers.

“Selling Government shares of Safaricom is akin to selling out our birthright. That's the birthright of Kenyans," Kalonzo said. 

"You cannot sell the house while the children are sleeping and call it an investment. This regime is determined to pawn the family silver—assets like Safaricom and Kenya Pipeline—just to get a quick cash injection to pay for a party that the ordinary Kenyan was never invited to."

Eugene Wamalwa, DAP Kenya leader, cautioned Vodacom against going ahead with the purchase of Safaricom shares, noting that such a transaction should be above board.

"Vodacom is a reputable international company, and we cannot let such a good profile be entered into a con deal. Buying a birthright of Kenyans will be counterproductive and Vodacom should stay away,” he said, adding that Kenya Kwanza’s approach to privatisation is flawed.

"The government is running down the country economically. They are selling off what belongs to the people to cover up for their fiscal failures and broken promises.”

Wamalwa has also noted that “we are seeing a regime that is determined to sell our most priced assets for a song to satisfy external interests.”

Kiharu MP Ndindi Nyoro has also consistently cautioned against both the sale of strategic assets but also the manner in which the government has gone on establishing the National Infrastructure Fund.

He has noted that the Fund would present more challenges than opportunities but also decried the rushed sale of state entities at below market values and entrusting them in private hands.

He was among the first to claim that the firm was undervalued when the Treasury announced the deal late last year. In late February, he repeated the same call, noting that history would judge the current administration harshly going by the Safaricom transaction. 

“Safaricom was undervalued. However much you shout, history will judge you wrongly that you sold Safaricom share, which is the property of Kenyans, for a price that is wrong… history books will be written and the verdict will be that you sold kenyans,” he said last week

Earlier, he warned on NIF noting that “Infrastructure fund means two things, it is either sale of government assets at a discount and more borrowing.”

National Treasury Cabinet Secretary John Mbadi has all through argued that the state's role should be limited to regulation and facilitation rather than direct competition in the marketplace.

He notes that the government’s dependence on parastatal dividends is a flawed fiscal strategy. Instead, he believes the state should focus on creating an enabling business environment that allows the private sector to generate profits, which the government then taxes for revenue.

While noting that the State still retains a strategic stake, Mbadi has also said its stake through the NSE would not have fetched the Sh34 that Vodacom has offered to pay per share. 

If anything, Mbadi argued, the likelihood would have been a discount on the current price. He also noted a local sale would also have the impact of further diluting the price per share as it would flood the market with more shares.

Mbadi also noted that offloading its Safaricom shares at NSE might have affected the KPC IPO.