By Benadeta Mwaura - Reporter
Kenya, May 19, 2026 - The High Court has extended orders blocking the Kenyan government from proceeding with the controversial sale of a 15 percent stake in Safaricom to South Africa’s Vodacom Group, delaying what would have been a massive Sh244.5 billion payout to the Treasury.
The ruling now throws one of Kenya’s largest corporate transactions into fresh uncertainty, even as the government faces growing pressure to finance infrastructure projects, manage debt obligations and plug budget deficits.
A three-judge bench ruled that the transaction should remain frozen until constitutional petitions challenging the legality of the sale are fully determined. “Consequently, we do not buy into the argument that a constitutional adjudication automatically results in loss of confidence by investors,” the judges said.
“Such an argument, if accepted by this court, would lead to immunity from judicial review for public dealings because those dealings are economically motivated,” the court added.
The Treasury had expected to receive Sh204.3 billion from the sale itself and an additional Sh40.2 billion in advance dividend payments tied to the government’s remaining 20 percent stake in Safaricom.
Under the deal, Vodacom would acquire the government’s 15 percent stake at Sh34 per share while also buying an additional five percent stake from Vodafone Group. Once completed, Vodacom’s ownership in Safaricom would rise to 55 percent, effectively giving the South African telecom giant majority control of Kenya’s most profitable company.
The transaction was challenged in court by petitioners including Tony Gachoka and Fredrick Ogola, who questioned the legality, transparency and broader public interest implications of reducing the State’s ownership in Safaricom.
Critics argue that Safaricom is not just another listed company, but a strategic national asset deeply intertwined with Kenya’s financial system through M-Pesa, digital payments, data infrastructure and telecommunications.
Concerns have also been raised over whether the government is getting full value from the transaction, especially considering Safaricom’s improving profitability and rising share price.
Earlier this year, Safaricom shares rallied to Sh34 on the Nairobi Securities Exchange, matching the Treasury’s agreed sale price and strengthening debate over whether the State should sell a highly profitable asset at a time when the company is posting record earnings.
Some critics have additionally questioned whether the sale could weaken Kenya’s strategic influence over critical digital and financial infrastructure in the long term.
Online discussions around the transaction have reflected growing public skepticism.
On Reddit, some users argued the deal risks handing over excessive control of a strategic Kenyan company to foreign interests, with one commenter describing the transaction as “a quiet state capture of one of the nation’s most strategic assets.”
Others questioned the timing of the sale given Safaricom’s strong financial rebound and rising dividends.
The Treasury has consistently defended the transaction, arguing that proceeds from the sale would finance large-scale infrastructure development through the newly established National Infrastructure Fund (NIF).
Treasury Cabinet Secretary John Mbadi previously said the fund would help finance commercially viable infrastructure projects including roads, railways, water systems and energy expansion.
“The proceeds of the sale of Safaricom shares will be exclusively used to de-risk and lower the cost of infrastructure projects,” Mbadi said earlier this year.
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The Treasury has argued that the divestiture forms part of a wider strategy to unlock capital from state-owned assets rather than relying heavily on expensive borrowing.
Mbadi had also insisted that the funds were not intended for direct budget support, stating: “Whether it comes, or doesn’t come, our budget will be implemented in the usual way.”
Still, the delayed transaction now complicates financing expectations at a time when Kenya is battling rising debt servicing costs and growing pressure to fund development projects without increasing taxation further.
Ironically, the court delay may end up benefiting the government in the short term.
Because the Treasury still retains its full 35 percent stake while the case drags on, it is now expected to receive approximately Sh16.1 billion in additional dividends from the disputed 15 percent stake if the transaction remains frozen beyond Safaricom’s August dividend book closure.
The timing is significant because Safaricom is currently experiencing one of the strongest financial recoveries in its history.
Earlier this month, the telecom giant reported a 67 percent jump in net profit to Sh95.6 billion and announced a record dividend payout.
The government’s share of Safaricom dividends for the financial year ending March 2026 is estimated at over Sh28 billion.
Much of Safaricom’s recent growth has been driven by M-Pesa, digital lending products such as Fuliza and continued expansion in Ethiopia, where the company is aggressively growing its customer base despite earlier losses..
The strong performance has strengthened arguments from critics who believe the government may be selling a highly strategic and profitable asset too early.
The government and Vodacom had argued that continued court delays could hurt investor confidence and damage Kenya’s image as an investment destination.
However, the judges dismissed that argument, insisting constitutional accountability cannot be sacrificed for commercial convenience.
“A quick reminder is that investor confidence in a constitutional democracy like ours is not founded upon the unchecked exercise of public power, but upon the assurance that the government acts within the confines of the Constitution and the law,” the judges ruled.
Vodacom CEO Shameel Joosub acknowledged that the company’s plans now fully depend on the court process.
“If the conservatory orders are not lifted, the court case will continue, and it could take a few more months. So, we are a little bit in the court’s hands,” he said during a recent investor briefing.
For now, Kenya’s most politically sensitive corporate deal remains stuck in legal limbo, caught between urgent fiscal needs, investor expectations and growing public concern over the future control of one of the country’s most strategic companies.