State moots plan to secure 20pc stake in high-risk industries

President William Ruto arrives for the presidential round table with Kenya Private Sector Alliance at Emara Ole Sereni, Nairobi, on August 6, 2025. [PCS]

The government is considering buying a 20 per cent stake in capital-intensive industries initiated by the private sector in a bid to derisk the entities.

A budget of Sh20 billion to the Kenya Development Corporation (KDC) has been suggested by President William Ruto to facilitate this plan as his administration seeks to boost industrial growth in the country.

The proposal was in response to a question on capital posed by the Kenya Private Sector Alliance (Kepsa) during a presidential round table with businesses held last week.

Kepsa requested increased funding to KDC as a way of addressing the high cost of credit.

President Ruto said apart from the concessional funding that businesses benefit from through KDC, the State's Development Finance Institution (DFI) is willing to do more if the industry aligns with his administration's agenda.

"I am happy to look for government resources to do more if the industry aligns with what we are doing," he said. "Apart from the resources we are getting from our development partners, we can commit our own resources as the government." He said the government can derisk some of the investments being made by the private sector by taking a stake.

"Even if it is 20 per cent," he said. "We should be able to do that, especially in critical sectors where the industry is not very comfortable."

Dr Ruto said the government can put its resources in those ventures and, over time, walk out when the investment is stable or the industry is comfortable with the exit. "We can approve maybe Sh10 billion...Sh15 billion...Sh20 billion into KDC (not only) to help the industry get concessional funding, but also we can derisk some of the investment they are going to make in growing our industrial capacity," he said.

Apart from offering concessional loans, KDC can also support businesses through venture capital, redeemable preference capital or ordinary equity. "The facility (ordinary equity) provides an opportunity for KDC to invest in new or existing enterprises in the priority areas by taking up shareholding," explains the State firm on its website. KDC Director General Norah Ratemo said the State-funded DFI has set aside more funds to focus on manufacturing-based industries, a key area of focus in their strategic plan.

She said various credit lines have been strategically sourced to support these businesses. "We are looking at countries where our manufacturers are exporting to or importing from to try and negotiate various (credit) lines," she said.

In the 2025/2026 financial year, KDC looks forward to mobilising Sh3 billion.

"Equally, we have received Sh4 billion that we shall be channelling through various financial institutions - saccos, micro-finance institutions, tier II and III banks so that they can support manufacturers who are not able to access it from us (directly)," she said. KDC also has a Sh1.9 billion ($15 million) credit line from Exim Bank of India, which it is negotiating to be enhanced to Sh32.3 billion ($250 million).