Investor Optimism and Legal Challenges Amid Kenya’s Privatization Drive in 2025

The new law revamps Kenya’s approach to privatizing state-owned enterprises (SOEs), aiming to unlock value from government assets, encourage private sector participation, and enhance operational efficiency across key government entities.

The Privatization Act, which replaces the 2005 legislation, establishes a new legal framework that streamlines the privatization process by reducing bureaucratic delays.

The legislation empowers the Treasury Cabinet Secretary to submit privatization programmes for Parliament’s approval within 60 days and establishes a dedicated Privatization Authority to oversee the process.

“During the formulation of the privatization programme, the Cabinet Secretary shall make appropriate consultations with persons who are likely to be affected by the privatization of a public entity,” the Act reads in part

The law introduces a Privatization Authority and an Appeals Board to ensure transparency and fairness in transactions.

The act targets the divestiture of 11 government entities, including profit-making and loss-making firms such as Kenya Pipeline Company (KPC), Kenyatta International Convention Centre (KICC), National Oil Corporation of Kenya (NOCK), New Kenya Cooperative Creameries (New-KCC), Kenya Seed Company, and others. The government plans to retain a minority stake in some entities while inviting significant private investment to boost revenue, reduce fiscal burdens, and improve service delivery.

Among the key entities targeted is Kenya Pipeline Company (KPC), the country’s leading fuel storage and transportation firm, which is set for an Initial Public Offering (IPO) on the NSE potentially before the end of 2025 sooner than the originally planned March 2026 timeline.

 The government aims to sell a 65 percent stake in KPC through the IPO, retaining 35 percent, and expects to raise at least Sh100 billion from the sale.

 This move is expected to significantly boost market liquidity and investor participation.

NSE Chairman Kiprono Kittony noted that investor interest is strong with bullish market indices, reflecting optimism about the KPC listing and the overall privatization agenda.

“Investors have shown a lot of interest and the indices are strong. We are just waiting for the government to finalize the process and bring KPC for listing which could even before the year ends. The market is bullish,” Kittony  said.

Recent market performance shows gains across major indices: the NSE 20 share index rose by 1.45 percent to 2,984.54 points, the NSE 25 by 2.11 percent to 4,682.27, and the NASI All-Share index climbed 2.21 percent to 176.39 points.

Market capitalization increased to Sh2.78 trillion, with the top five traded companies Safaricom, KCB, KPLC, Equity, and KenGen dominating turnover. While the privatization programme covers 11 state corporations, including the Kenya Literature Bureau and New Kenya Co-operative Creameries (NKCC), the spotlight remains on KPC due to its robust profitability.

Financial highlights for KPC reveal a net profit of Sh6.87 billion in 2024, marking a 52.7 percent increase from the previous year, alongside a significant reduction in long-term debt, enhancing its investment appeal.

Meanwhile, the once-thriving textile firm Rivatex East Africa Limited has been leased to foreign investor ARISE Integrated Industrial Platforms under a 21-year agreement, signaling progressive steps in public-private partnerships.

 In sum, the Privatization Act is catalyzing a renewed investor interest in Kenyan capital markets and signaling a strategic pivot towards greater private sector involvement in previously state-dominated sectors.

The government anticipates that the IPO of KPC and other privatization efforts will generate vital revenue and enhance service delivery while deepening Kenya’s financial markets