Ruto's privatisation push boosts forex reserves to record $15.4b

Kenya's foreign exchange reserves surged to a record $15.4 billion (Sh1.99 trillion) in the week ended July 30, providing the country with 6.4 months of import cover, the apex bank said on Friday.

It was not immediately clear whether the figure included proceeds from the government's partial divestiture of Safaricom.

The $1.55 billion (Sh199.9 billion) weekly increase from $13.85 billion (Sh1.77 trillion) the previous week pushes Kenya's reserves to their highest level on record, more than double the crisis lows of early 2024.

The reserves have now remained above $12 billion (Sh1.56 trillion) since January 2026, comfortably exceeding the statutory requirement of four months of import cover and the East African Community's recommended benchmark of 4.5 months.

The strengthened buffer comes at a critical moment for President William Ruto's administration, which is battling economic fallout from renewed US-Iran hostilities.

The conflict has disrupted global oil markets, with Murban crude rising to $72.27 (Sh9,320)  per barrel on July 9 from $67.99  (Sh8,833) the week earlier, though prices eased later in the month.

Foreign exchange reserves serve as a critical financial safety net, allowing the Central Bank of Kenya (CBK) to intervene in currency markets during periods of excessive volatility while ensuring Kenya can service external debts and fund essential imports such as medicines and fuel. A higher import cover indicates a more robust position, while lower cover suggests vulnerability.

With reserves now providing 6.4 months of cover, and the potential for further increases from the Safaricom proceeds, the CBK has clearer capacity to lean against disorderly market moves if global volatility spikes, analysts say.

The timing of the Safaricom transaction proceeds has been a subject of market speculation.

The $2.1 billion (Sh270 billion) deal, completed on June 30, saw Vodacom acquire a 15 per cent stake from the government of Kenya and an effective further five per cent from Vodafone Group Plc at Sh34 per share.

The government retained a 20 per cent stake in the Nairobi Securities Exchange-listed company.

However, as of July 15, a fortnight after the transaction closed, CBK Governor Kamau Thugge confirmed the Safaricom proceeds had not yet hit the State's accounts.

"We've seen the money from the Safaricom transaction. It's yet to hit our reserves position, but I think it's just about to," Thugge told the 23rd East African Banking School Conference on July 15.

He projected the funds would take reserves to approximately $16 billion  (Sh2.08 trillion), equivalent to nearly seven months of import cover.

Safaricom's Annual General Meeting was held on Friday (July 31), a day after the CBK's reserve data cut-off, where shareholders approved 14 special resolutions giving legal effect to the company's new ownership structure and paving the way for a dividend boost from Treasury.

As of press time, it remained unclear whether the Safaricom proceeds, totalling Sh244.5 billion (approximately $1.89 billion), including Sh40.2 billion paid upfront for future dividend rights, had been credited to the CBK's reserves.

Market analysts noted that the $1.55 billion weekly increase closely matches the combined value of other known inflows received in July.  The record $15.4 billion reserve position as of July 30 reflects at least two confirmed inflows.

They include a $750 million (Sh97.5 billion) World Bank disbursement for governance and social protection programmes, which drove reserves to $14.13 billion (Sh1.86 trillion) as of July 9.

Additionally, about $800 million (Sh104 billion) in proceeds from the Kenya Pipeline Company (KPC) initial public offering was set to be received in April after Kenya's largest privatisation in nearly two decades.

These two inflows total $1.55 billion, exactly matching the weekly increase, suggesting the Safaricom proceeds may not yet be reflected in the published figures. The CBK did not provide a breakdown of the weekly change, and its bulletin only noted that reserves "remained adequate."

Thugge had signalled that reserves would rise even further in the coming weeks, regardless of the Safaricom timing.

"Notwithstanding what's happening in the Middle East, we expect the exchange rate to remain relatively stable and for us to have reserve cover anywhere between 5.5 months and six months of imports," Thugge said on July 15. "I think that is sufficient for us to be able to address any of the domestic shocks that may come towards the end of the year or if the Middle East crisis escalates beyond where we are now."

The Shilling remained broadly stable against major international and regional currencies during the week, trading at 129.40 per US dollar on July 30, compared with 129.53 a week earlier. The currency has traded within a narrow band since March 2024, supported by the robust reserve position.