The Safaricom head office in Nairobi.
Taxpayers lost at least Sh14.3 billion after the National Treasury and the National Assembly closed ranks to disregard technical advice from a State think tank and push through the controversial sale of Safaricom shares at a lower price.
The Kenya Institute of Public Policy and Research Analysis (KIPPRA), in a policy memorandum on the partial divestiture presented to the National Assembly in January 2026 and seen by Nation, recommended a minimum price of Sh36.38 per share.
This was as the government sought to offload 15 per cent, or 6,009,814,200 shares, of its 35 per cent stake in Safaricom PLC.
KIPPRA is an autonomous public policy think-tank and State corporation mandated to provide data-driven policy advice to the government. Established in 1997 and formalised under the KIPPRA Act of 2006, the agency bridges the gap between scientific research and government policy and planning.
At the KIPPRA valuation, the sale would have earned the government Sh218.3 billion. However, the two government agencies disregarded the technical advice and settled on Sh34 per share, raising Sh204 billion, a difference of Sh14.3 billion.
KIPPRA’s expert advice was presented to a joint sitting of the National Assembly’s Finance and National Planning Committee chaired by Molo MP Kuria Kimani and the Public Debt and Privatisation Committee chaired by Balambala MP Abdi Shurie.
National Assembly Committee on Finance and National Planning Chairperson Kuria Kimani.
The presentation was made before the two committees began stakeholder engagement on the proposed partial divestiture of the government’s 15 per cent stake, as required under Sessional Paper No. 3 of 2025.
The Sessional Paper was tabled in the National Assembly on January 4, 2025 and subsequently committed to the two committees for joint processing.
The committees engaged KIPPRA to evaluate the economic rationale, valuation, structure and long-term implications of selling the State’s stake in Safaricom, one of Kenya’s most profitable companies.
“Based on KIPPRA and other available valuations by investment banks, the National Treasury can consider setting the minimum selling price at Sh36.38 and negotiating for a higher selling price or subjecting the process to a competitive bidding,” the KIPPRA policy document recommended.
The agency said the figure was arrived at after an extensive analysis and noted that the proposed selling price of Sh34 was slightly below its Sh36.38 valuation.
The sale also saw the government receive Sh40.2 billion in lieu of future dividends on the residual 20 per cent shareholding in the telecommunications company, bringing the total proceeds to Sh240.2 billion, which the government said would be used to fund critical infrastructure projects.
However, the two committees, in their joint report to the House recommending approval of the divestiture, adopted the lower price.
Intriguingly, KIPPRA is not mentioned anywhere in the committee’s 122-page report among the stakeholders who appeared before the committees. Its recommendations were also not captured in the report to guide the government’s decision-making.
This was despite the serious concerns KIPPRA had raised about the proposed divestiture, including possible exposure to future fiscal deficits, foreign exchange pressures, market integrity issues and inadequate disclosure on the specific projects to be funded with the proceeds.
It also questioned the government’s long-standing position that the sale would ease the burden on the Exchequer of financing critical infrastructure projects.
The think-tank warned that the government could forgo more than Sh1.2 trillion in dividends over the next 30 years as a result of the divestiture.
“The forgone dividends would be much higher than the Sh204 billion,” KIPPRA warned, noting that while the sale would expand fiscal space in the short term, that space would be limited in future, potentially exposing the government to fiscal deficits.
The committee report shows that the National Treasury enlisted KCB Investment Bank in November 2025 to undertake an independent valuation of Safaricom shares.
While disregarding the KIPPRA recommendation, the joint report adopted by the House said the proposed offer price of Sh34 per share was arrived at using various assumptions, projections and weightings applied across different valuation methodologies.
“It is the joint committee's view [that] the negotiated price reflects a premium above historical market trading levels and aligns with subsequent market movements, thereby mitigating concerns regarding potential undervaluation,” the report says.
KIPPRA had also recommended that the sale be conducted through competitive bidding in line with Section 34(b) of the Privatisation Act, under which the government offers shares to a bidder who meets the tender criteria.
The think-tank said this would help the government secure higher returns and warned that selling the shares to Vodacom Group without competitive bidding raised transparency concerns.
“There is limited public information on the process used to select the buyer for the government,” KIPPRA said, noting that Vodacom, through Vodafone Kenya Limited, was already a shareholder.
“The available reports do not indicate whether the selection followed a competitive or tendered process, or if alternative buyers were considered.”
Treasury Cabinet Secretary John Mbadi.
National Treasury CS John Mbadi defended the choice of Vodacom, saying the proposed buyer was a long-standing investor in Safaricom, holding approximately 40 per cent through Vodafone Kenya, and had deep regional experience and a track record in capital investment, digital infrastructure, innovation and financial inclusion.
The CS said the increased stake would reinforce Safaricom’s competitiveness and growth trajectory.
The law provides for several methods of privatisation, including an initial public offering of shares, sale of shares by public tender, sale resulting from the exercise of pre-emptive rights or other methods determined by the Cabinet.
The joint committee said negotiating with an existing strategic shareholder “minimises execution risk, preserves market confidence and avoids potential governance instability that may arise from introducing a new controlling or influential shareholder.”
It also observed that alternative disposal methods, including a public offering or cross-listing, could have introduced additional market volatility, currency risks and potential downward pressure on the share price because of increased supply in the market.
KIPPRA, however, argued that common stock represents an ownership interest in a business and carries a claim on future cash flows. It said discounted cash flow valuation models provide the foundation for securities valuation by treating the intrinsic value of common stock as the present value of expected future cash flows.
The document shows that although the government will receive Sh240.2 billion in immediate revenue to fund infrastructure investments, it will forgo annual dividends of about Sh7.2 billion in the short term.
This is based on the most recent dividend per share of Sh1.20 for the 6,009,814,200 shares sold, which had been generating income for the government and helping fund budget activities.
KIPPRA said that over the past decade, Safaricom’s earnings per share growth averaged 8.7 per cent, while the dividend payout ratio averaged 77.8 per cent.
Assuming the same earnings growth and dividend payout ratios are maintained, the dividends foregone on the 15 per cent stake over the next 30 years would amount to Sh1.2 trillion in nominal and present-value terms.
The figure is projected at Sh121.89 billion between 2025 and 2034, Sh280.72 billion between 2035 and 2044, and Sh745.92 billion between 2045 and 2055.
In nominal terms, KIPPRA said, the Sh1.2 trillion in dividends that would be foregone over the next 30 years, excluding capital gains, would be substantially higher than the Sh204 billion received from the sale.
“While the sale expands the fiscal space in the short term, it will be limited in future thus may increase fiscal deficit,” the policy document says, adding that the government would need to sustain efforts to reduce the deficit, including enhancing revenue collection.
Besides constraining fiscal space, KIPPRA said, the sale could have implications for the exchange rate and foreign exchange reserves.
At the current shareholding of 40 per cent, Vodafone Kenya holds 16 billion shares, which translate to about Sh19.2 billion in dividends at the recent dividend per share of Sh1.20.
If the shareholding by Vodafone Kenya rises to 55 per cent, or about 22.04 billion shares, the dividends paid to it would increase to approximately Sh26.4 billion.
KIPPRA warned that as the additional dividends are repatriated to Vodacom Group’s parent company, the increased outflow could put pressure on the Kenya shilling and the country’s foreign exchange reserves.
“The foreign currency-related pressure may devalue the Kshs,” KIPPRA warned, noting that a large portion of Kenya’s external debt, Sh5.7 trillion, is denominated in US dollars, which accounted for 59.8 per cent of overall external debt in 2024/25.
It said depreciation of the Kenya shilling against the US dollar would mean more shillings would be required to purchase the foreign currency needed to meet principal and interest repayments.
KIPPRA also warned that the interests of Safaricom’s minority shareholders may have been overlooked in the sale, raising concerns about market integrity and investor fairness.
Safaricom has 533,549 shareholders, with institutional and retail investors holding significant stakes. Institutional shareholders own about 1.9 billion shares, equivalent to 4.8 per cent, while retail investors own about 8.2 billion shares, or about 20 per cent.
Although these investors collectively form a significant shareholder base, KIPPRA said they had not been given sufficient notice and information to make informed decisions.
This, it said, limited their ability to anticipate or hedge against the effects of ownership dilution and changes in the company’s strategic direction.
“Safaricom being a strategic and listed company, a phased IPO style approach would have been considered for the partial divestiture,” KIPPRA said.
It argued that in listed strategic companies, a phased IPO-style approach maximises transparency, protects retail investors and preserves market integrity, warning that departing from the model increases perception risks even where transactions are procedurally compliant.
“The government divestment of Safaricom shares with the partially disclosed transaction will therefore increase information asymmetry and reduce investors’ inclusivity,” KIPPRA said.
The agency further argued that minority shareholders had no opportunity to participate in the acquisition, leading to a concentration of ownership without inclusive access, with institutional and retail investors relegated to passive observers.
“While the Safaricom transaction preserves minority shareholders’ legal and economic rights, it falls short of best practice standards on procedural fairness, predictability and equal access — key components of minority protection in strategic listed companies.”
KIPPRA also pointed out that Safaricom is not merely a profitable company generating recurring returns, but a strategic asset that facilitates digital financial inclusion, underpins national payments infrastructure and processes about Sh111 billion in financial transactions daily through M-Pesa, based on September 2025 data.
The company also maintains the largest share of Kenya’s mobile money market, with 89.7 per cent of subscriptions.
The agency noted that while the Sessional Paper largely focused on the existence and value of the sale, its fiscal justification and compliance with legal and regulatory requirements, “it does not state why the option of partial divestiture is the best alternative.”
Beyond the broad statement that the proceeds would be used to support infrastructure development, KIPPRA said there was no clarification of the specific projects to be funded or mechanism for ensuring that the proceeds would be tracked and outcomes reported.
“This reduces the perceived legitimacy of the sale. The best practice is specificity, transparency and reporting.”
“The disposal of public strategic assets without full disclosure of alternatives, information on the proposed transaction and the long-term impact undermines public trust in asset stewardship. While the proceeds are clear in amount, details on project allocation remain insufficiently disclosed.”
“This weak link of the sale to public benefit limits public trust and accountability. Thus, erosion of public trust increases resistance to future reforms and asset optimization efforts,” warns KIPPRA.
The policy priority is therefore transparency, stakeholder engagement and clear communication of the transaction, says KIPPRA.
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