Kenya’s High Court has declared the government’s sale of a 15% equity stake in Safaricom to South Africa’s Vodacom Group unconstitutional, ordering the shares restored to the state. The ruling nullifies the December transaction that would have increased Vodacom’s controlling interest in East Africa’s largest telecommunications provider to 55%, while reducing the Kenyan Treasury’s holding to 20%.
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In a unanimous decision, a three-judge panel in Nairobi ruled that the divestiture violated public finance management laws, bypassed mandatory public participation requirements, and lacked competitive bidding procedures. The court emphasized that key transactional records—including the share-purchase agreement and dividend rights purchase pact—were withheld from public scrutiny. Additionally, the judges concluded that transferring effective operational control of a critical national asset to a foreign shareholder compromised national security and constituted an unapproved corporate takeover, noting that the parties failed to obtain required regulatory exemptions from the Competition Authority.
The judicial setback presents severe fiscal implications for President William Ruto’s administration, which is executing a broader privatization program to finance a $39-billion infrastructure initiative covering transportation, energy, and water projects. Under the court’s order to restore the equity, the cash-strapped government faces the potential obligation of refunding approximately $1.9 billion in upfront capital and securitized dividend proceeds received from the deal.
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Following the announcement, Vodacom shares dropped nearly 4% in Johannesburg trading before paring losses, while Safaricom shares rose up to 2.2% on the Nairobi Securities Exchange. The ruling underscores growing judicial scrutiny surrounding state asset sales across emerging markets, establishing a firm legal precedent for transparency, public disclosure, and statutory compliance in sovereign privatization transactions.
