Kenya announces privatization of 35 state companies amid economic challenges

President William Ruto revealed on Thursday that Kenya is set to privatize 35 state-owned companies and is contemplating opening up the capital of an additional 100 entities.

This decision comes in response to the East African nation grappling with liquidity issues and economic hardships exacerbated by the impact of Covid, the repercussions of the Ukraine war, and a historic drought in the Horn of Africa.

As Kenya, a key economic player in East Africa, faces these challenges, public debt has surged to over 10,100 billion shillings (64.4 billion euros) by the end of June, representing about two-thirds of the gross domestic product, according to Treasury figures.

President Ruto informed investors, “We have identified the first 35 companies that we are going to offer to the private sector, and we have nearly 100 others.” This move aligns with recent recommendations from the International Monetary Fund (IMF) urging Kenyan authorities to reform state-owned enterprises, citing notable entities such as the national electricity supplier Kenya Power and the airline Kenya Airways, both of which experienced significant losses in 2022.

In a bid to address the challenges faced by lucrative public enterprises stifled by government bureaucracy, President Ruto emphasized the potential for better services through private sector involvement. The recent signing of a law facilitating the privatization of public companies reflects the government’s commitment to these reforms.

Kenya’s economic landscape has prompted international support, with the IMF announcing a $938 million loan agreement in November, and the World Bank planning to provide $12 billion in support over the next three years. To mitigate the country’s debt burden, President Ruto’s government has introduced an unpopular budget, marked by new taxes expected to generate 289 billion shillings (2 billion euros) as part of the 3,600 billion shillings (24 billion euros) budget for 2023-24, a move that has triggered occasional violent demonstrations among the population.