State appeals court ruling nullifying Safaricom stake sale

By  Rushdie Oudia

Correspondent

Nation Media Group

The government has filed a notice of appeal challenging the High Court ruling that nullified the proposed partial sale of its 15 per cent shareholding in Safaricom PLC to Vodacom, insisting that the divestiture was lawful.

The government had sold its 15 per cent stake for Sh204.3 billion, translating to Sh34 per share. In the deal, the government also received about Sh40.7 billion through the sale of its future dividend rights on the remaining 20 per cent stake.

But on Tuesday, the High Court nullified the sale, finding that the transaction had been undertaken in breach of the Constitution and the law.

The ruling also quashed Sessional Paper No. 3 of 2025, which had been approved by the National Assembly.

A three-judge bench ordered the restoration of the shares to the government, saying the divestiture was marred by inadequate public participation, concealment of material information, an arbitrary pricing process and failure to address national security concerns arising from the transfer of effective control of the telecommunications company to foreign investors.

National Treasury Cabinet Secretary John Mbadi said the government was studying the full judgment closely and would shortly set out, through the appropriate legal channels, the grounds on which it considers the court’s findings merit further judicial review.

“The divestiture was conceived, developed and presented to Cabinet and the National Assembly as a considered fiscal measure structured to unlock value for the Exchequer while safeguarding the strategic character of an institution that touches the daily lives of over 50 million Kenyans. The process followed the law and is in line with prudent financial management coherent with the nation’s fiscal realities,” Mr Mbadi said.

He stated that the right to development was balanced alongside every other obligation the Constitution places on the State, rather than being set against them.

The Treasury CS challenged the court’s finding that the government had failed to carry out adequate public participation.

The court ruled that public participation must be more than a numerical exercise involving public meetings and hearings.

According to the judges, although Parliament conducted public hearings in 30 counties, critical documents relating to the transaction, including the share purchase agreement and the agreement concerning future dividend rights, were not made available to the public.

“I dare say that the Executive led in doing a lot of public participation. If there is any one transaction or one engagement that I feel confident that we did a lot of public participation on, it is this particular divestiture. We do not accept that the safeguards built into these transactions, including the protections extended to Safaricom’s employees, dealers and business partners, amounted to the constitutional and procedural failures as the court has asserted,” Mr Mbadi said.

According to him, the transaction was conceived to unlock value from a government-held asset for national infrastructure and was subjected to Cabinet approval, Parliamentary Committee scrutiny and a National Assembly resolution under Section 87A of the Public Finance Management Act, 2012.

He said these measures reflected the principles of prudent public finance management and accountability to future generations.

He pointed out that the State intends to make its case fully on appeal and pursue it vigorously.

“The National Treasury will pursue this appeal vigorously and provide further updates as the matter progresses through the courts,” he said.

The case was filed by activist Tony Gachoka and others, who challenged the sale of what they described as a critical national asset.

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