Safaricom PLC is the linchpin of the nation’s digital transformation in Kenya. It is more than a telecom company. Its M-PESA mobile money platform, launched in 2007, now processes nearly two-thirds of Kenya’s GDP in transactions and reaches over 80% of adults. Safaricom is the country’s largest company by market capitalization, and its shares account for the lion’s share of trading on the Nairobi Securities Exchange PLC . Its M-PESA system alone serves roughly 38 million Kenyans, offering everything from school fee payments to savings and microinsurance. This ubiquity means Safaricom powers small merchants, farmers, and city dwellers alike – supporting livelihoods from Nairobi’s “matatu” drivers to Maasai herders selling produce. It's safe to say Safaricom’s wellspring of mobile money is like a “high-yielding cow” generating steady milk for Kenyan households.
Against this backdrop of digital inclusion and economic vitality, the Kenyan government’s recent sale of a 15% Safaricom stake to Vodacom for KSh 204.3 billion ($1.57 billion) – plus an upfront KSh 40.2 billion payment for future dividends on its remaining 20% – has sparked intense scrutiny. The total proceeds of KSh 244.5 billion (about $1.89 billion in cash) represent one of the country’s largest ever asset divestitures. The government says this windfall will seed new national funds for roads, energy and other infrastructure, helping bridge fiscal gaps without borrowing more. But thought leaders and critics warn that selling down Kenya’s crown jewel risks undercutting the digital economy and national sovereignty. They argue that the short-term cash infusion comes at the cost of losing control over a strategic asset, likely forfeiting future revenue and innovation. This piece examines both sides – the rationale and the red flags – through expert analysis, data and historical lessons, offering a complete view for finance and policy leaders.
The Government’s Rationale – Liquidity for Development? President Ruto’s Treasury argues that the Safaricom sale is a pragmatic response to Kenya’s fiscal strain. With public debt ballooning to roughly 78% of GDP and annual interest payments consuming about 40% of government revenues, traditional financing options are limited. Higher taxes or further borrowing risk political unrest – indeed, proposed tax hikes in 2024 triggered street protests and even a $100 million IMF bailout to stabilize the budget. In this environment, converting an equity stake into ready cash appears attractive. Cabinet Secretary for the National Treasury and Economic Planning John Mbadi framed the transaction as “converting one asset into another” – recycling Safaricom’s value into infrastructure funds and a sovereign wealth fund.
The state maintains it will keep a 20% “strategic” stake in Safaricom, plus board representation and oversight guarantees, to safeguard national interests. By this logic, raising KSh 244.5 billion through a share sale and dividend monetization frees up funding for roads, airports, irrigation and energy without adding new debt. Analysts note Vodacom paid a 23.6% premium on the stock’s recent average price, suggesting fair market value. In a bid to soften the blow, Ruto’s team touts the deal as delivering a “critical capital injection” at a time of soaring debt, all while keeping Safaricom majority Kenyan-owned. For example, Vodacom agreed to conditions protecting Safaricom’s Kenyan identity and workforce (more on this below), as well as pledges to sustain the Safaricom Foundation and avoid mass layoffs for three years. Supporters say this is an “efficient” way to spur development: Africa’s biggest private investor is being tapped to fund national growth, with the government still at the decision-making table.
But must Kenya sell this golden goose for short-term milk? Thought leaders counter that dumping a high-performing national asset for immediate cash is economically and strategically myopic. While the cabinet says the proceeds are earmarked for long-term funds, skeptics note that converting perpetual dividends into a one-off payment ($311 million in advance) sacrifices years – if not decades – of stable revenue. Safaricom has delivered roughly KSh 18–20 billion in dividends annually to the state, meaning the KSh 40.2 billion for future payouts covers barely two years of that income. In effect, Kenya is trading a reliable cash cow for a single payout. Moreover, government figures show debt service reached 41% of revenues even before this sale, so the fiscal problems are far from solved. Interest payments could rise further with higher global rates, meaning a few billion from Safaricom hardly addresses the underlying debt dynamics.
Financially, opponents argue the state could have raised capital in other ways. For instance, it has sold retail bonds (including a 2023 green bond) at interest costs, or could still pursue non-urgent loans at slightly higher rates rather than parting with Safaricom. In fact, Kenya’s sovereign bonds have been trading at yields around 11% recently; on that basis, maintaining Safaricom’s income stream could be cheaper than incurring those future interest costs. Indeed, some lawmakers suggest refinancing debt with lower-rate multilateral loans (now partially unlocked under the IMF program) rather than privatizing away the country’s crown jewel.
Another concern is transparency and fairness of the process. Rather than a public offering, the sale was negotiated privately with Vodacom (and its parent Vodafone). This deal structure “locked out” Kenyan retail investors, pension funds and SACCOs – groups that in past asset sales (even Safaricom’s 2008 IPO) were given first dibs. Treasury officials defend this choice by pointing to the premium paid and urgency of funds. But critics point to pricing and value issues. Opponents note Safaricom shares traded at KSh 45–70 as recently as 2021, giving a market cap near KSh 1.8 trillion, whereas the government accepted KSh 34 per share, implying a KSh 1.4 trillion valuation. As MP Ndindi Nyoro put it in one of his social media posts, selling at this price is “grossly bad for Kenya” – a 24% cut from two years ago. Former Deputy President Rigathi Gachagua used an agricultural metaphor: by selling “the high-yielding cow” (Safaricom) for quick cash, Kenya is “losing around Sh250 billion” of future benefit. Such comments underscore a view that the sale may have been hastily negotiated, and the public has not been properly heard. Indeed, parliamentary committees only began accepting memoranda after an uproar over the rushed nature of the deal.
Digital Sovereignty and Market Control Safaricom is not any ordinary company. It operates critical national infrastructure – especially M-PESA – that underpins Kenya’s digital sovereignty. M-PESA’s technology, customer data and network effects have become intertwined with nearly every aspect of Kenyan life. When more than half the population relies on one private platform for payments, questions naturally arise: who controls that system, and to whose interests will it respond? Under the new deal, Vodacom (a foreign-owned group) jumps to a 54.9% shareholding, giving it effective control of Safaricom. In practice, this hands the architects of M-PESA and its regulators to a group headquartered outside Kenya.
Some safeguards have been imposed. Kenya’s government negotiated strict conditions to preserve local control elements. These include requiring that Safaricom’s CEO and board chair remain Kenyan citizens, its brand and identity not be changed without permission, and its headquarters, jobs and key assets remain in Kenya. Safaricom must keep its M-PESA trustees Kenyan and spend the foundation’s funds domestically. Vodacom even agreed not to alter suppliers or execute mass layoffs outside routine staffing changes for at least three years. In effect, the deal’s architects aimed to ensure Kenya “holds the steering wheel with two hands,” even if foreign ownership increases. This level of contractual control is unusual but reflects the government’s recognition that some influence must remain.
However, experts warn that such contractual promises are only a partial hedge. Once Vodacom holds a majority, it will set strategy through its appointed management – albeit with Kenya’s two board seats. Kenya has no golden-share veto in place, so it largely depends on Vodacom’s goodwill and regulatory enforcement. The soft conditions can be changed or circumvented in practice: for instance, Kenyans could be allowed in name, but Vodacom may still outsource or subcontract in ways that dilute Kenyan content. Likewise, refusing a CEO from abroad doesn’t prevent Vodacom from inserting its managers elsewhere in the company hierarchy. Over time, Vodacom’s global priorities could eclipse local ones.
A bigger worry is data and security. M-PESA holds detailed financial data on tens of millions of Kenyans. Although Kenya’s Data Protection Act (2019) governs personal data, putting a foreign majority in charge of this treasure trove inevitably raises sovereign concerns. What happens if geopolitical or commercial tensions grow between South Africa and Kenya? Could future governments be locked out of accessing infrastructure they once fully owned? Moreover, if a security breach occurred in Vodacom’s network, Kenya might have less recourse. In short, experts argue that digital platforms of “national significance” should be treated akin to critical infrastructure, with stronger domestic oversight. Some African states (like Nigeria’s new digital economy law) are beginning to wrestle with these issues, proposing digital sovereignty measures. Kenya will need to explicitly address M-PESA’s status – beyond mere shareholder contracts – if it is to truly control its payments system.
Finally, competition and consumer choice may be affected. Safaricom’s rivals (Airtel, Telkom, banks’ fintech offerings) may find a differently incentivized majority owner less willing to cooperate. For example, banks have long pushed for full interoperability with M-PESA; a foreign parent might balk at changes that erode Safaricom’s market power. Already Safaricom holds an overwhelming share of mobile money transactions. As Silas Nyanchwani-MPRSK notes, when a platform of this scale becomes foreign-led, issues like pricing power, access for competitors, and data protection “naturally arise”. Regulators will have to be vigilant to ensure Vodacom’s control doesn’t dampen innovation. After all, Kenya’s vibrant fintech ecosystem – from mobile lending apps to e-commerce services – grew up tapping into Safaricom’s rails. If that gatekeeper suddenly shifts focus to other markets or business lines, Kenyan startups could lose their footing.
Indeed, historical example after example shows that when key infrastructure moves to outside hands, local industries often get left behind. As Kenyan policymakers survey these risks, they will remember tales like Zambia’s. When Zambia privatized most of Zamtel (the incumbent telco), a later government slammed the deal as “illegal” and tried to reverse it. While Kenya’s circumstances differ, that episode is a caution: once national assets shift to foreign control, recovering them can be bitterly contested. (Argentina, too, experienced broad re-nationalizations of utilities and telecoms in the 2000s after privatizations ran into trouble, underscoring that privatization is not a one-way street.) Kenya’s leaders must weigh whether short-term revenue outweighs the opportunity cost of ceding digital sovereignty and stunting long-term innovation.
Regulatory Safeguards – Are They Enough? Kenya’s authorities can claim multiple checks on the deal. The Capital Markets Authority (CMA) must sign off on this related-party transaction, and the Competition Authority (CAK) must ensure no antitrust harm. In principle, the law requires shareholder and public notifications for such a sizeable stake transfer. Parliament has also stepped in: facing public outcry, lawmakers launched a “public participation” (sigh) process and will debate the sale’s terms. But history suggests regulators alone may not fully protect the public interest. Safaricom already dominates telecom (67% market share in 2018) and fintech services, a position confirmed by Kenya’s Competition Authority at the time. The CAK has ruled Safaricom must open up its agent networks to rivals, but abuse of dominance remains a concern. With Vodacom in control, any edge in prices or service levels by other players could face resistance.
The CMA’s role is mostly procedural – ensuring disclosure and fairness to existing shareholders – and it cannot by itself impose behavioral remedies beyond the negotiated sale terms. The deal’s bespoke restrictions (local leadership, branding, etc.) are important, but not legally ironclad beyond the transaction contract. Kenya’s Telecommunications Act and Central Bank regulations cover operational aspects (licenses, mobile money regulations), but were written for different ownership patterns. None currently prevent a foreign entity holding majority of a license without substantial safeguards. In short, regulators will need to innovate new rules. For example, they might require Safaricom’s payments network to remain interoperable (building on recent steps like PesaLink) or impose user-data localization. Without such measures, the government’s hope that retaining two board seats will ensure influence could prove optimistic.
One positive development is that Kenya’s Central Bank and bankers’ associations are already working to strengthen alternative payment rails. In the last few years, the Kenya Bankers Association launched PesaLink (2017) and rolled out full interoperability among banks and fintechs (person-to-person transfers in 2018; merchant payments in 2022). Now the Central Bank is finalizing a national Fast Payment System (FPS) to let any bank or fintech send real-time payments without going through M-PESA. This effort – which will connect 58th global FPS – is aimed precisely at breaking a single payment platform’s stranglehold. Accelerating and fully funding FPS rollout would give consumers alternatives to M-PESA, mitigating concentration risk. In effect, an open FPS could be a major “break glass” regulator in case Safaricom’s dominance begins to harm competition.
Another safeguard could be a golden share mechanism. In other countries, governments have sometimes kept a special veto share in privatized firms deemed of strategic interest. Such a share would allow Kenya to block any future sale of Safaricom itself, or other major corporate actions (e.g., changing M-PESA rules, shifting data centers abroad) even if it only holds a minority stake. Many Eastern European and Latin American governments retained golden shares after 1990s privatizations of energy and telecom companies to protect national security and public interest. Kenya might consider adding such statutory rights to its telecom laws or Safaricom’s constitution, giving the state a permanent safeguard. Without it, Kenya’s fate in Safaricom will always be subject to Vodacom’s boardroom agendas.
In summary, existing safeguards – from competition law to contractual promises – may not be enough. The sale’s behind-doors nature means the public has little clarity on terms beyond what negotiators say. Given Safaricom’s unique role, Kenyan regulators should prepare for post-sale vigilance: frequent audits of compliance, dynamic monitoring of fintech market health, and a willingness to strengthen regulations on digital infrastructure. Kenya may well need new laws to treat “systemically important” digital platforms with the kind of oversight usually reserved for banks or utilities.
Forward-Looking Recommendations.
Going forward, Kenya and other African policymakers should treat the Safaricom deal as a wake-up call. If a government must divest shares in critical digital firms, it must do so in a way that safeguards national interests and competition. For Kenya, key recommendations include:
Strengthen digital infrastructure policy.
Treat large payment platforms like public utilities. For example, enshrine regulatory powers for the Communications Authority or CBK to oversee interoperability, pricing and data handling of M-PESA. Kenya could emulate models where dominant networks must interconnect non-exclusively, or where the state can mandate parity access for competitors. In practice, this might mean requiring Safaricom to fully expose its agent networks and APIs to rival services, and publishing periodic compliance reports. The goal is to cement M-PESA’s original ethos as a universal public service, not a closed profit silo.
Implement a golden-share or similar protective right.
Add a special class of share or contractual right so that the government retains veto power over core decisions – for example, foreign share thresholds, sale of the company, or repatriation of data. The golden share concept has protected national industries in China, Brazil and EU countries; it could be adapted for Kenya by decree or by amending Safaricom’s articles. Such a right would give Kenya a lasting hand on the wheel, even if its equity stake remains at 20%.
Accelerate the Central Bank’s Fast Payment System.
Ensure the FPS platform is live and widely adopted as soon as possible. By enabling instant transfers across all banks and fintechs, the FPS will give Kenyans real options beyond M-PESA. For instance, a person could send money from any mobile banking app to any other instantly. The government should commit extra funding or incentives to launch FPS in 2026, making sure even rural lenders and fintechs can connect. Early success of the FPS (and related innovations like mobile wallets, CBDC pilots, or inter-country remittance links) will reduce systemic risk and competition concerns.
Expand data protection and cybersecurity oversight.
Ensure that any cross-border data flows in Safaricom/Vodacom’s hands comply with Kenyan laws. Possibly require that M-PESA core servers remain on Kenyan soil. Also strengthen oversight of digital lending and credit information tied to Safaricom’s platforms, so customer privacy and financial stability are not compromised under a foreign parent.
Incentivize local innovation independent of Safaricom.
Support fintech startups building on open standards (like PesaLink or open banking APIs) rather than proprietary mobile money channels. The government and development partners could fund grants or prizes for local solutions that run on community networks or bank networks. This reduces reliance on one platform and encourages a broader digital ecosystem.
Review broader privatization strategy.
Finally, take stock of other strategic assets under consideration for sale. The Safaricom experience suggests proceeding very cautiously with any further stake sales, unless the above safeguards are in place. Policymakers might consider alternatives such as partial IPOs, bond financing, or public-private partnerships that preserve public stakes. Lessons from Zambia’s Zamtel case and Argentina’s utilities tell us that divesting national infrastructure without robust checks can have political and economic costs down the road. Kenya should demand full competitive assessments and public debates before any future sales.
Conclusion.
Safaricom has been Kenya’s digital backbone, fueling financial inclusion, entrepreneurship and fiscal revenues. Its success story is woven into everyday life, from urban entrepreneurs to rural communities – a legacy built in part by keeping control in Kenyan hands. By selling a large chunk to a foreign majority partner, the government gains immediate capital but also raises existential questions: Who will guide Kenya’s payments future? Who controls the data and networks upon which millions depend? The coming years will reveal whether Kenya struck the right balance or undermined its long-term interests. To merit public trust, the deal must not only yield roads and airports but also ensure a vibrant, sovereign digital economy. Embedding strong regulations, golden-share rights and infrastructure alternatives can tip the scales toward a responsible transition. As one local leader metaphorically warned, Kenya must not leave its children “with nothing to feed them” after drinking the milk. With careful policy action, Kenya can hopefully reap the immediate rewards of the sale and keep its digital cow in the barn for future milking.