The sale of the government’s 15 percent stake in Safaricom has elicited healthy debate. Some critics of the deal argue that the State is giving up a strategic asset and could be undervaluing the future earnings prospects of the firm.
Some reports have stated that the government would be leaving up to Sh15 billion worth of future dividend payments on the table by cashing out an upfront payment of Sh40.2 billion from Vodacom.
However, the trends and developments in the technology sector and the company’s planned investments in cutting-edge technology in the short to medium term provide a dynamic projection for future earnings.
In 2021, Safaricom paid out Sh36.8 billion in dividends. The following year, investors got Sh30 billion, which further fell to Sh24 billion in 2023 before rising to Sh26 billion in both 2024 and 2025.
Over the same period, the global economy has gone through a pandemic, a supply chain crisis, trade and tariff wars.
Dividend payments, which are anchored to the overall earnings companies make annually, vary year-on-year based on performance.
These can be volatile as a company’s performance in the market, particularly one that is as enmeshed in the global economy as a telecommunications firm, is subject to numerous trends and risks.
By opting for the initial Sh40.2 billion payment from Vodacom, the State is banking on the present time value of money, at an opportune moment for the country and the strategic telco.
Further, the government will still collect tax expenses from Safaricom, long considered among the largest corporate taxpayers in the country.
In 2025, Safaricom paid up Sh46 billion in income tax expense to the Treasury, up from Sh41 billion paid in 2024.
The funds from this transaction will further be seed capital for the National Infrastructure Fund and the Sovereign Wealth Fund, a boost to national development and future investment.
During his State of the Nation address last month, President William Ruto said the government would create the two funds to help marshal budgetary funds for infrastructure development and future investment.
The funds will be administered by the Treasury, with part of their objectives including providing a savings base for future generations when mineral and petroleum resources are exhausted. A portion of all royalties from natural resources and a portion of the proceeds of the privatisation of national assets will be invested in the fund.
The sell-off will aid the government in its efforts to raise domestic revenue in the face of a growing debt burden, which has seen Kenya’s public debt cross Sh11 trillion this year.
The government’s ceding of its stake in the telco will also broaden the company’s innovation wheel, now unhindered by bureaucratic red tape. This is expected to propel the firm’s growth at a time when international tech giants, including Meta, Alphabet, and Starlink, are making significant inroads into the region’s consumer tech market.
Oscar Magu is Managing Partner, Maudhui House – A Public Affairs Consultancy. Email: [email protected]
