On Thursday, November 23rd, President William Ruto of Kenya announced a bold move to privatize 35 state-owned companies, with an additional 100 firms under consideration. This decision, part of a broader strategy to revitalize the Kenyan economy, marks a significant shift in the country’s approach to managing its assets.
The announcement came against the backdrop of numerous challenges facing Kenya, including depleted government coffers, a rise in the rate of inflation, and a stark decrease in currency value. These economic pressures have heightened the need for innovative solutions to stimulate growth and stabilize the nation’s financial health.
President Ruto, addressing a gathering of African stock market officials in Nairobi, outlined the government’s plan. “We have identified the first 35 companies that we are going to offer to the private sector,” he stated, emphasizing the administration’s commitment to reducing bureaucracy and enhancing private sector participation in the economy.
This move follows the recent enactment of a revised privatization bill, which simplifies the process of selling state enterprises to private entities. The last significant privatization in Kenya occurred in 2008 with the Initial Public Offering (IPO) of 25% of the shares in telecommunications giant Safaricom. Since then, despite a cabinet approval in 2009 for the privatization of 26 firms, including the Kenya Pipeline Company and Kenya Electricity Generating Company, no substantial action has been taken.
Kenya’s economic landscape, often regarded as East Africa’s powerhouse, has been marred by a series of fiscal challenges. The country’s debt had accumulated to more than 10.1 trillion shillings ($66 billion USD) by the end of June, representing around two-thirds of its gross domestic product. The International Monetary Fund (IMF) recently agreed to a $938 million loan for Kenya, which also faces a $2 billion Eurobond repayment next year. The World Bank has also pledged $12 billion in support over the next three years.
In addition to agreeing to the loan, the IMF urged the Ruto administration to reform several public sector firms, particularly highlighting the national electricity supplier Kenya Power and the national carrier Kenya Airways, both of which reported record losses last year.
President Ruto refrained from specifying which companies are slated for privatization. However, the move is seen as a critical step in addressing the country’s economic woes and attracting foreign investment. By opening up these state-owned enterprises to private ownership, the government aims to inject much-needed capital into the economy, improve efficiency, and foster a more competitive business environment.