By Ebi Kesiena
In a significant development, a court in Kenya has temporarily suspended the privatization of 11 state-owned companies, including the national oil and gas company, in response to an appeal lodged by the main opposition party.
The court decision, announced on Tuesday by High Court judge Chacha Mwita, cited constitutional and legal issues of public importance raised by the opposition, delaying the sale process until February 6, when the case will be thoroughly examined.
Opposition leader Raila Odinga argued that the sale of state holdings, including key entities vital to the country’s strategic interests, should be subjected to a referendum. The affected companies play a pivotal role in Kenya, the economic powerhouse of East Africa.
Recall that the Kenyan government, facing financial challenges with falling tax revenues, had announced on November 27 the intention to sell stakes in 11 public companies as a measure to bolster state coffers. This decision came amidst galloping inflation, a depreciating currency, and escalating debt repayment costs.
President William Ruto had identified 35 companies for privatization, including the national oil and gas company, agricultural enterprises, and a publishing house. However, the court’s intervention has halted the process for now.
As of June, Kenya’s public debt exceeded 10,100 billion shillings (approximately 64.4 billion euros), constituting around two-thirds of the country’s gross domestic product (GDP). The servicing cost of the debt, primarily to China, has surged, and the Kenyan currency has reached record lows, trading at approximately 153 to the dollar.
The agricultural sector, contributing 21% to the GDP in 2022, has suffered from adverse weather conditions, including drought and torrential rains.
Kenya passed a privatisation law in 2005, and until now, only six public companies, including Safaricom and KenGen, have undergone partial privatization, marking this legal suspension as a notable development in the country’s economic landscape.