Nairobi – Kenya said Wednesday it will appeal a court ruling that annulled a major stake sale in its leading telecoms company — a move which analysts fear could endanger the country’s flagship infrastructure plans.
President William Ruto created a $39 billion National Infrastructure Fund earlier this year aimed at pulling together public and private investment that is crucial to hopes of transforming the east African country towards middle income status.
But analysts say that plan is in jeopardy after the High Court on Tuesday annulled the sale of a $1.9 billion stake in Safaricom, Kenya’s most valuable company.
Safaricom has become a regional success story thanks largely to M-Pesa, a pioneering mobile payment service launched in 2007 and now available in eight African countries with a reported 60 million monthly users.
On June 30, South African giant Vodacom bought a 15 percent stake from the Kenyan government and 5 percent from Vodafone Kenya, making it the majority shareholder.
The court said it breached several legal and constitutional provisions.
The government said Wednesday that it will appeal the decision, asserting that all regulations had been followed.
Fortune Ochako, writer for financial advice platform MoneyAcademyKE, told AFP that proceeds from the sale were crucial to launching the National Infrastructure Fund (NIF).
“The Safaricom proceeds were meant to help capitalise NIF,” he told AFP.
“If the ruling eventually stands and the transaction is unwound, the government could face a major cash flow issue,” he told AFP.
“It could also affect the NIF’s ability to finance and attract private capital for infrastructure projects,” he added.
The decision is also complicated by the fact Vodacom has already been exercising its rights as a majority shareholder, including altering the structure of the board of directors, Ochaka said.
And there could be knock-on effects in the region as Safaricom has the second-largest mobile network in Ethiopia, as well as a mobile payment licence there.
More broadly, it brings “additional uncertainty” to any cross-border investments in east Africa, particularly in strategic sectors and the payments industry, added Ochako.
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Source: AFP
