A court has issued a suspension on the privatization proceedings of 11 state-owned entities in Kenya, including the national oil and gas company, in response to an appeal by the principal opposition party, as disclosed by a court source on Tuesday, December 5, 2023.
Opposition leader Raila Odinga contends that the divestiture of state holdings demands a referendum, citing the strategic significance of the involved companies within Kenya, the economic powerhouse of East Africa. High Court judge Chacha Mwita, in a decision rendered late on Monday, expressed satisfaction that the opposition’s application raises constitutional and legal issues of significant public importance, necessitating careful examination.
Consequently, the sale process has been halted until February 6, when the case will be comprehensively reviewed on its merits.
On November 27, the Kenyan government unveiled plans to divest stakes in 11 public entities to bolster state finances amid declining tax revenues. The country’s economy grapples with escalating inflation and a depreciating currency, resulting in a surge in the cost of debt repayment.
The 11 companies earmarked for privatization, including the national oil and gas company, agricultural enterprises, and a publishing house, constitute a portion of the 35 entities President William Ruto outlined for privatization last week.
As of the end of June, Kenya’s public debt surpassed 10,100 billion shillings (approximately 64.4 billion euros), representing around two-thirds of the gross domestic product in the country of approximately 53 million inhabitants. The mounting cost of servicing the nation’s debt, predominantly to China, has coincided with a significant depreciation of the Kenyan currency, presently trading at around 153 shillings to the dollar.
The agricultural sector, contributing 21% to the GDP in 2022 and serving as a cornerstone of the Kenyan economy, faces challenges due to recent adverse weather conditions, including drought and subsequent heavy rainfall.
Since the enactment of Kenya’s privatisation law in 2005, only six public entities have undergone partial divestment, encompassing notable entities such as the leading telecommunications operator Safaricom and the electricity producer KenGen.
