The Court of Appeal has cleared the way for the government's proposed Sh204.3 billion sale of a 15 per cent stake in Safaricom PLc, handing President William Ruto major victory in his fiscal policy.
The court lifted last month's High Court orders that had frozen the transaction while constitutional challenges over the disposal of one of country's most valuable public assets await hearing.
The ruling hands President Ruto's administration a major legal victory after it argued that delaying the transaction risked disrupting fiscal planning, infrastructure financing and investor confidence.
However, the advocate representing the petitioners challenging the sale said they would move to the Supreme Court, accusing the appellate court of hearing the government's application before all parties had been properly served.
"We are headed to the Supreme Court because the Court of Appeal heard the government's application when some parties had not been served and when we brought to the attention of the court about the non-service, we were given two hours to prepare for the hearing," said Mr Lempaa Suyianka, petitioners' advocate.
The three-judge bench suspended conservatory orders issued by the High Court on May 18, allowing the proposed divestiture to proceed pending determination of the government's appeal.
The dispute stems from the government's proposal to sell 15 percent of its 35 percent shareholding in Safaricom to Vodacom, a transaction the Treasury says forms part of a broader fiscal consolidation programme.
In seeking to overturn the High Court orders, the National Treasury, the Ministry of Information, Communications and the Digital Economy, the Attorney-General and the Privatisation Commission argued that the injunction had frozen a time-sensitive commercial transaction and threatened national economic interests.
Safaricom PLC headquarters in Westlands, Nairobi.
Photo credit: File | Nation Media Group
Court papers show the government told the appellate judges the proposed sale was expected to generate about Sh204.3 billion, alongside an upfront Sh40.2 billion payment tied to future dividends.
It said the proceeds were earmarked for infrastructure projects, budget support, fiscal stability and long-term national savings.
The State also argued that prolonged uncertainty could cause the proposed buyer to renegotiate the price, postpone the deal or abandon it altogether, undermining foreign capital inflows and broader economic planning.
Treasury further maintained that the High Court had acknowledged no sale agreement had been executed and that the transaction remained subject to statutory and regulatory approvals, making the conservatory orders unnecessarily broad.
The constitutional challenge was filed by broadcaster Tony Gachoka together with Prof. Frederick Ogola, Samuel Kahara Macharia and Paul Maina Mugo.
They argue that the proposed sale violates constitutional requirements governing disposal of public assets, lacked adequate public participation and transparency, and undervalues the government's shares by fixing the price at Sh34 each.
The petitioners further contend that transferring the stake to Vodacom would leave the South African telecommunications group with majority control of Safaricom while reducing the government's holding to 20 percent, raising constitutional and public-interest concerns over control of strategic communications infrastructure.
Opposing the government's application, Gachoka argued that preserving the High Court orders was necessary to prevent the constitutional petitions from being overtaken by events if the transaction proceeded before the legality of the sale was determined.
He dismissed the government's claims of investor uncertainty and fiscal prejudice as speculative and unsupported, arguing that public interest also includes transparency, accountability and lawful management of public assets.
During the hearing, counsel for Safaricom supported the government's application, saying continued suspension of the transaction imposed substantial financial costs on the exchequer and delayed access to funds intended for public investment.
The company's lawyer argued the shares would remain traceable and any transaction could be reversed if the constitutional petition ultimately succeeded.
The petitioners' lawyer, Lempaa Suyianka, maintained that the dispute concerns far more than the value of the shares, saying the process of disposing of a strategic public asset must comply with the Constitution.
Following Friday's ruling, Mr Suyianka said the petitioners would challenge the decision before the Supreme Court.
"We are headed to the Supreme Court because the Court of Appeal heard the application when some parties had not been served," he said.
"When they brought the issue of non-service to the attention of the court, they were given only two hours to prepare for the hearing."
The constitutional petitions challenging the legality of the proposed Safaricom stake sale remain pending before the High Court even as the government is now free to continue with the transaction unless the Supreme Court intervenes.
