Kenya offers 11 state companies for sale in privatization drive
Kenya is set to kick off its privatization initiative by offering stakes in 11 companies, including the state-owned oil pipeline, as part of a broader strategy to generate revenue amid increasing debt repayments. The companies, which are among a total of over 35 slated for sale, encompass diverse sectors such as a government-owned oil pipeline, a major convention center in Nairobi, a textbook publisher, agri-business firms, and industrial companies.
The government, seeking fiscal consolidation and economic development, aims to partially privatize these entities. Among the companies listed, the Kenya Pipeline Company, fully owned by the government, stands out as a profitable entity with a monopoly on the transport of gas and white oil products.
The finance ministry has invited public input on the privatization plan until December 11, as mandated by the constitution. This move marks Kenya's renewed focus on privatization, the last instance being in 2008 when the government conducted an initial public offering, offering a 25% stake in the telecommunications firm Safaricom.
Key Takeaways
Kenya is currently grappling with a liquidity crisis and a historically high debt burden, exceeding $66 billion as of the end of June, equivalent to around two-thirds of the GDP. Treasury figures indicate that servicing public debt, particularly to China, has become increasingly expensive due to the depreciation of Kenya's currency, with the shilling now trading at around 152 to the dollar. Additionally, the country faces a $2 billion Eurobond repayment due next year. The Kenya Revenue Authority reported last month that it fell short of its first-quarter revenue target by over $500 million, citing a sluggish economy. The agricultural sector, a key contributor to Kenya's economy, representing approximately 21% of GDP in 2022, is under pressure due to a combination of drought and heavy rains. To address these challenges, Kenya is embarking on a privatization drive. Notably, the country has a history of privatization, with only six state firms being partly sold since the enactment of a privatization law in 2005.
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