<\/p>\n
President William Ruto\u2019s $39 billion infrastructure plans could be starved of cash after a Kenyan court quashed his administration\u2019s recent divestiture in East Africa\u2019s most valuable company.<\/p>\n
The sale of a 15% stake in Safaricom Plc to Vodacom Group was meant to provide $1.9 billion in seed capital for a newly established National Infrastructure Fund to finance a seven-year project rollout.<\/p>\n
High court judges invalidated the deal on Tuesday, saying Kenya\u2019s constitution doesn\u2019t provide for divestitures as a means for the government to raise revenue. Other than Safaricom, Treasury has already pocketed $820 million from an initial public offering in Kenya Pipeline Co. earlier in the year.<\/p>\n
The NIF hoped to leverage those privatisation proceeds to raise 10 times more financing from pension funds and banks. Ruto, who\u2019s seeking a second term in elections less than a year away, may borrow more to sustain his infrastructure build-out or scale back his plans, analysts said.<\/p>\n
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\u201cRuto will try to plug the gap by leaning on further public-private partnerships and the NSSF, though this is highly unlikely to be sufficient,\u201d said Edward Bach, senior Africa analyst at risk intelligence company Verisk Maplecroft, referring to the National Social Security Fund. \u201cRuto\u2019s ambitions and the Fund will need to be significantly scaled back.\u201d<\/p>\n
The government, which doesn\u2019t have much room to raise taxes, has pivoted to privatisation of state assets and securitisation of future tax revenue to raise project financing for the $141 billion economy.<\/p>\n
\u201cOur base case is increased borrowing from both domestic and external markets,\u201d said Stellar Swakei, a macro, fixed-income and banking analyst at Renaissance Capital Kenya. \u201cWe expect the government to leverage available liquidity to finance infrastructure through the election.\u201d<\/p>\n
It may also seek more user-pays projects, such as tolled roads, according to Churchill Ogutu, head of research at Nairobi-based Capital A Investment Bank.<\/p>\n
\u201cThey\u2019ll revert to capital markets financing, securitisation and definitely borrowing as they resolve the legal issues,\u201d Ogutu said.<\/p>\n
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Both Vodacom and Kenya\u2019s Treasury have said they\u2019ll appeal the decision.<\/p>\n
The High Court said Safaricom\u2019s pricing was arbitrary as authorities only hired a transaction adviser after reaching a 34-shilling per share price, denying Kenyans the chance of getting a better price for the public asset. It also tore into the decision to deposit the proceeds in the NIF, saying the fund doesn\u2019t ringfence cash for specific projects.<\/p>\n
Safaricom shares were down 4.7% by 1:27 p.m. in Nairobi, while Vodacom extended losses by dropping as much as 2.7% in Johannesburg.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
#Safaricom #sale #ruling #risks #Rutos #39bn #project #pipeline<\/p>\n","protected":false},"excerpt":{"rendered":"
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