With just four months remaining until the year ends, all eyes are on President William Ruto to deliver on his promise of selling shares in as many as 10 State-owned companies on the Nairobi Securities Exchange (NSE).

“I have made a commitment that between five and 10 public enterprises that are mature should be listed in the next 12 months,” he said on October 11, 2022.

“My administration will revitalise capital markets by embarking on privatisation of State corporations where divestiture is overdue,” the President added. The commitment made last year aimed to invigorate Kenya’s economy by attracting investment and promoting transparency in the corporate sector.
Capital markets

Ruto’s pledge also included a commitment to collaborate with private companies to overcome the challenges associated with listing on the NSE. The move was welcomed by the business community, which saw it as an opportunity to enhance the attractiveness of Kenya’s capital markets to both domestic and foreign investors.

The Privatisation Commission has lined up 25 entities for State divestiture including the Kenya Pipeline Company, the Kenya Ports Authority, the Kenya Tourist Development Corporation, the Consolidated Bank, the Development Bank of Kenya and the Agrochemical and Food Corporation. The list also has ailing state millers Chemilil Sugar, South Nyanza, Nzoia, Miwani and Muhoroni.

The programme also proposes further share divestitures by the government in listed firms, including KenGen, East Africa Portland Cement and the National Bank of Kenya. Kenya’s privatisation history has had its fair share of controversy, with critics pointing to the process in the past being hijacked by well-connected individuals to snap up some of the state corporations for a song.

Ruto expressed hopes that listing of government parastatals would boost the NSE, which has not had an Initial Public Offering (IPO) since October 2015, when the Stanlib Fahari REIT was listed.

The last successful privatisation by the government was the Safaricom initial public offering in 2008.
Listing of companies on the NSE allows shareholders to transact in the shares of the company and share risks and benefit from any increase in the organisational value.

However, time is running out for the President to demonstrate tangible progress on these fronts. One of the highlights of Ruto’s promise was his plan to float a domestic dollar-denominated bond.

This innovative financial instrument, if successfully introduced, could potentially provide a new source of funding for the government while offering investors an opportunity to diversify their portfolios.

The success of this initiative would rely heavily on the government’s ability to effectively market the bond and assure investors of its credibility. As the clock ticks down, stakeholders are keenly observing whether President Ruto’s administration can deliver on these commitments.

The success of this endeavour has the potential to significantly impact Kenya’s economic landscape, drawing in the much-needed funding to the Treasury. While these initiatives hold substantial promise, meticulous planning and execution are essential for achieving the desired outcomes.

The Kenya Kwanza administration will need to address regulatory, legal, and financial challenges that can arise during the listing process, ensuring that it is a smooth and transparent endeavour.
Privatisation Bill

The Cabinet early this year approved the Privatisation Bill, 2023, which gives power to the National Treasury to privatise public-owned enterprises without the approval of Parliament, describing an early process seeking the legislators’ nod as “bureaucratic”.

According to the Cabinet, the sale of non-strategic, non-performing public entities will help improve the upgrade of infrastructure and the delivery of services to Kenyans.