LSK wants State sale of Safaricom shares delayed

Law Society of Kenya president Faith Odhiambo says the government must consider the legal, social and economic factors in the sale of stake in Safaricom. [File, Standard]

The Law Society of Kenya (LSK) has proposed the deferment of the divestiture of Safaricom Limited shares until a transparent and independently verifiable and competitive sale structure is in place as per article 201 of the Constitution.

LSK president Faith Odhiambo told the joint sitting of the National Assembly Finance and Public Debt and Privatisation committees that the government must handle the transaction above board, considering the legal, social and economic factors and risks arising in the sale of such a critical asset to a foreign entity.

Odhiambo said that while the LSK agrees with the government on the need for debt-free infrastructure funding, the divestiture must guarantee future local availability of these entities that were built and sustained by Kenyans from the ground up.

“We urge the National Assembly to decline approval of the Sessional Paper in its current form. The Sessional Paper should be reviewed, revised, and subjected to wider stakeholder engagement before any implementation is undertaken,” said Odhiambo.

She called for a transparent, competitive price discovery process, including consideration of multiple bidders, the disclosure of detailed valuation, financial and market-risk analyses and a comprehensive national security, data sovereignty and fiscal impact assessment.

Odhiambo said that Safaricom PLC, although a publicly listed company, is regarded as a national asset by virtue of its market dominance, its central role in telecommunications and mobile financial infrastructure through M-Pesa, and its position as a bellwether stock at the Nairobi Securities Exchange.

“The government of Kenya holds shares in Safaricom PLC in trust for the people thereby rendering such shareholding a public asset subject to constitutional safeguards,” she said.

She pointed out that the Constitution in Articles 10, 95, 201 and 227 mandates Parliament to ensure public participation, transparency, accountability and prudent management of public resources in any such decision. The LSK boss said they had reviewed the Sessional Paper and that it was evident the proposed divestiture reflects mixed prudence.

Odhiambo noted that while the LSK acknowledges the prevailing fiscal pressures facing the government and recognises that the proposed sale may generate resources to support the budget, particularly development expenditure temporarily easing reliance on market borrowing, LSK, does not support the proposed divestiture model due to its broader constitutional and governance implications.

“We propose a comprehensive fiscal impact assessment before any reduction of its shareholding, quantifying the long-term loss of dividend income, strategic influence and wider economic spill-overs against the projected benefits of the proposed sale. Such assessment should incorporate long-term valuation benchmarks rather than short-term market averages, evaluate the appropriateness,” said Odhiambo.

Nairobi Stock Exchange CEO Frank Mwiti said that while fully supporting the transaction, the NSE recommends that its execution be undertaken through the NSE Block Trading Board, with the recommendation not intended to alter the agreed commercial terms, nor delay implementation.

Mwiti said the Trading Block was designed to ensure that execution aligns with established market principles, regulatory safeguards, and best international practices.

“This transaction is fiscally responsible, strategically sound, and poised to deliver significant benefits to the economy and capital markets,” he said.

Kenya Association of Stockbrokers and Investment Banks CEO Willy Njoroge said that they supported the execution of the divestiture through NSE’’s Block Trading Board since it provides a regulated, transparent and orderly mechanism for executing large-scale transactions in listed securities without disrupting normal market trading.