11 State Owned Companies Go For Sale In Kenya

Kenya’s finance ministry said it will offer stakes in 11 state-owned companies to raise funds for depleted government coffers as tax revenues continue to fall below target.

The move comes as the East African nation contends with surging inflation and a depreciating currency, leading to increased debt repayment costs.

Among the 11 companies slated for privatization are Kenya’s oil and gas corporation, a pipeline operator, various agricultural entities, and a book publisher. These companies are part of the 35 firms identified by President William Ruto last week as candidates for privatization. The government aims for fiscal consolidation and economic development through this initiative, with a focus on enhancing efficiency and competition, especially for the four companies currently incurring losses.

The profitable Kenya Pipeline Company is set for privatization to encourage greater private sector involvement, improving overall efficiency and competitiveness. The company manages over 1,300 kilometers of pipeline, extending from the Indian Ocean port city of Mombasa to remote areas of the country.

Investors will also have the opportunity to acquire the Kenyatta International Conference Centre in Nairobi, a significant convention center and iconic structure housing parliamentary offices.

Kenya faces a liquidity challenge and historically high debt levels, exceeding 10.1 trillion shillings ($66 billion) as of June, equivalent to approximately two-thirds of GDP. Servicing public debt, particularly to China, has become more costly due to the devaluation of Kenya’s currency, which now trades at around 152 shillings to the dollar. Additionally, the country has a $2-billion eurobond repayment due next year.

The Kenya Revenue Authority reported missing its first-quarter revenue target by over $500 million last month, attributing the shortfall to a sluggish economy. The agricultural sector, a key contributor to Kenya’s economy, has faced challenges from both drought and excessive rainfall.

Since the enactment of privatization legislation in 2005, only six state-owned enterprises have been partially sold, including major telecoms operator Safaricom and electricity generator KenGen. Public input on the privatization plan is welcomed until December 11.