Why renewed privatisation push is key to Kenya’s fiscal situation
By Victor Mukabi, August 4, 2025Amid the tight fiscal space that the country is operating in currently, the Kenya Kwanza government believes privatisation of state-owned agencies will help in revitalising the agencies for more revenues to impact public debt.
In the current financial year, a month old, the total national budget has been set at Ksh4.2 trillion, out of which total revenue is set to be at Ksh3.3 trillion, with the ordinary revenue contributing Ksh2.8 trillion.
The remaining Ksh900 billion, the fiscal deficit, is set to be raised from the Appropriation in Aid and grants.
According to National Treasury Cabinet Secretary, John Mbadi, who was appearing before the Senate Finance and Budget Committee on July 30, 2025, this move would be vital in reducing exchequer funding while allowing optimum performance.
He observed that the private sector has the capacity to increase the yields by up to 50 per cent, a factor which has potential positive impacts, from job creation to increased income.
“I have heard some people asking what the rush in privatising government-owned enterprises is. I will tell you there is no rush. We have been on this pace for too long, and we must make a move. The government is not in the business of doing business but should provide a conducive environment for people to do business,” he said.
This means that Kenyans will be able to own part of the agencies, a move that will also boost transparency and accountability in the institutions.
“Among the benefits is deepening of our capital market, which is now the best in the continent, and you are also allowing for democratisation of wealth in the country, where you allow ordinary people to partake or have some ownership of some of our key state-owned enterprises,” he said.
Citing Safaricom’s financial performance, he noted that if the government had still been the majority shareholder, the revenues from the Telco would be about 10 per cent of what it is yielding currently.
“Even though we now only own 35 per cent, the dividend that we are getting out of Safaricom, I’m sure, would still be much higher than if we held Safaricom’s 100 per cent. Efficiency is very high,” he cited.
Additionally, he mentioned that plans to privatise Kenya Pipeline Corporation is on course and that even the neighbouring Uganda is actively being pursued to take part in the process at a time when it is facing stiff competition from Tanzania. He added that this is also open to other countries.
“We are even asking Uganda to come in and invest. By Uganda investing here, there is some assurance you are getting now, because Tanzania is also competing with Uganda, so you can access that market. Now, if they have a stake here, it is very easy to access that market. There are a lot of benefits, a lot of reach, and Uganda is accepting to participate in this.”
Mbadi reiterated that even though he corporation is in the profit-making phase, currently generating between Ksh3 and 4 billion, it still holds much potential and by privatising it, the income would be about five times.
“For example, the profit goes up to four times, with 35 per cent, you still get, if not more, then equal to the dividend you are getting at 100 per cent, but you have also sold a stake, and you have made capital gain out of it,” he explained.
With this as part of the measures to cushion public debt, the government highlights that critical development projects can be able to get funding more easily.
Kenya Pipeline Corporation
Recently, the government has continuously been pursuing the domestic market for loans to finance its functions, a move that has continued to pile pressure on available domestic options such as the commercial banks, which continue to be relied on by the private sector.
While this reduces the risks associated with currency fluctuations, the private sectors continue to have challenges accessing loan facilities for scalability due to the government securities preferences by commercial banks.
With stifled scalability, the government continues to struggle with revenue mobilisation due to a shrinking tax base characterised by scarce job opportunities and reduced business activities.
Domestic borrowing currently holds the biggest share in the total public debt, which as of April 30, stood at Ksh11.5 trillion.
However, a document from the National Treasury, during the senate session, seen by People Daily, highlighted that the stock of public and publicly guaranteed debt stood at Ksh11.7 trillion by the end of June but was not presented on.
As the government continues to drum up support for the privatisation processes, disclosing details of the beneficial owners of investing firms and enhancing transparency will largely be vital to the success of the ambitious initiative.