By Benadeta Mwaura - Reporter
Kenya, July 15, 2026 - The Kenyan government is set to receive more than KSh204 billion from the partial sale of its stake in Safaricom to South Africa's Vodacom Group, making it one of the largest single privatization transactions in the country's history.
While the deal has generated debate over state ownership of strategic assets, attention is now shifting to how the government intends to spend the proceeds.
The transaction saw the government dispose of 15% of its shareholding in Safaricom at KSh34 per share, raising about KSh204.3 billion, while also receiving an advance dividend.
Following the transaction, the State retained a 20% stake, Vodacom increased its effective ownership to approximately 55%, and the remaining shares continue to be held by public investors through the Nairobi Securities Exchange.
Rather than using the money for recurrent expenditure such as salaries and operational costs, the National Treasury has indicated that the proceeds will finance infrastructure projects and reduce pressure on government borrowing.
The strategy forms part of a broader plan to unlock capital from mature state investments without introducing new taxes or significantly increasing public debt.
One of the largest beneficiaries is expected to be the country's road infrastructure programme. Treasury plans indicate that part of the funds will be directed towards completing stalled national highways, rehabilitating existing roads and constructing new transport corridors aimed at improving movement of goods and lowering logistics costs.
Better road connectivity is expected to enhance trade, attract private investment and support regional integration.
The government also intends to channel part of the proceeds into expanding water and sanitation infrastructure. Several counties continue to experience water shortages, and investments are expected to target new dams, water distribution systems, irrigation schemes and sanitation facilities.
Improved access to clean water is viewed as critical for agriculture, public health and industrial development.
Affordable housing is another priority expected to receive funding. The programme, which is one of the government's flagship economic initiatives, seeks to reduce Kenya's housing deficit while creating employment opportunities in construction and related industries. Additional financing could accelerate construction of housing units, supporting urban development and stimulating demand across the building materials value chain.
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Healthcare infrastructure is also expected to benefit from the windfall. Planned investments include upgrading hospitals, expanding medical facilities and improving access to healthcare equipment and services as the government pursues universal health coverage.
Education projects are similarly expected to receive allocations, particularly the construction and rehabilitation of schools, technical training institutions and learning facilities to accommodate Kenya's growing population and strengthen human capital development.
The government has also identified energy infrastructure as another strategic area. Investments in electricity transmission, rural electrification and renewable energy projects are expected to improve access to reliable power while supporting industrial growth and digital transformation.
Digital infrastructure is another emerging priority. Kenya has positioned itself as a regional technology hub, and additional investment in broadband connectivity, government digital services, data infrastructure and innovation ecosystems is expected to support economic competitiveness and improve service delivery.
Beyond infrastructure, part of the proceeds is expected to strengthen fiscal stability by reducing reliance on expensive domestic and external borrowing. Kenya continues to face a heavy public debt burden, and using privatization proceeds to finance development projects could ease pressure on future budgets while lowering debt-servicing costs.
The Safaricom transaction forms part of a wider privatization agenda under the Privatisation Act, 2025, which allows the government to partially divest from selected state-owned enterprises to unlock capital for development while retaining strategic interests in key companies.
Similar plans have been discussed for other state corporations as the Treasury seeks alternative sources of financing amid constrained fiscal space.
Supporters argue that the sale enables the government to convert a mature investment into immediate development financing without increasing taxes, while critics maintain that reducing public ownership in one of Kenya's most profitable companies could limit future dividend income and government influence over a strategic national asset.
Nevertheless, the success of the transaction is likely to be judged less by the amount raised than by how effectively the funds are invested. If directed towards productive infrastructure that stimulates economic growth, creates jobs and improves public services, the Safaricom windfall could become one of Kenya's most significant development financing initiatives in recent years.