Kenya court suspends privatisation of 11 companies

The High Court in Kenya has temporarily suspended the privatization process of 11 state-owned enterprises, including the national oil and gas company, following an appeal by the main opposition party. The appeal, led by opposition leader Raila Odinga, argues that the strategic significance of these companies warrants a public referendum on the sale of the state’s holdings.

High Court judge Chacha Mwita, in a decision issued late on Monday, stated that he found merit in the opposition’s application, citing constitutional and legal issues of public importance that demand careful consideration. As a result, the ongoing privatization process will remain on hold until February 6, when the case will undergo a thorough examination.

The Kenyan government had announced on November 27 its intention to sell stakes in 11 public companies, aiming to bolster state finances amidst falling tax revenues. The country’s economy grapples with galloping inflation and a weakening currency, leading to increased costs in debt repayment.

Among the companies slated for privatization are the national oil and gas company, agricultural enterprises, and a publishing house. President William Ruto had previously revealed plans to privatize a total of 35 companies, seeking to address economic challenges. As of the end of June, Kenya’s public debt exceeded 10,100 billion shillings, accounting for around two-thirds of the country’s gross domestic product.

The escalating cost of servicing the nation’s debt, particularly to China, has coincided with a significant devaluation of the Kenyan currency, currently trading at approximately 153 shillings to the dollar. The agricultural sector, a cornerstone of the Kenyan economy contributing 21% to the GDP in 2022, faces additional strain from adverse weather conditions, including both drought and torrential rains.

Kenya, having enacted a privatisation law in 2005, has previously privatized only six public companies, including major entities like Safaricom and KenGen. The current legal challenge puts a spotlight on the balance between economic restructuring and ensuring public participation in decisions of national importance.