Kenya has unveiled an ambitious strategy to privatise key state-owned enterprises and deepen local capital markets, aiming to reduce its growing reliance on foreign debt. Announced by President William Ruto at the London Stock Exchange on July 2, 2025, the plan includes listing the Kenya Pipeline Company through an initial public offering (IPO) on the Nairobi Securities Exchange (NSE) later this year.
At first glance, the move appears timely. Kenya recently scrapped controversial tax hikes amounting to KSh 346 billion (about US$2.68 billion) after widespread protests and public pressure. Now facing austerity measures and constrained fiscal space, the government is turning to domestic capital mobilisation as a new path to financial resilience.
But this pivot raises several critical questions: Is privatisation the right tool for fiscal repair? Who gains in the short term, and who carries the long-term burden?
Financial Discipline and Market Deepening
One clear advantage of the new strategy is its potential to deepen Kenya’s financial markets. By listing infrastructure-backed bonds and key public assets, the government is expanding opportunities for both institutional and retail investors to participate in the real economy.
Such listings can enhance transparency, improve corporate governance, and help price public assets more accurately. If executed well, they could also encourage domestic savings and unlock liquidity from the private sector, especially after the withdrawal of some donor funds like USAID support.
Moreover, by selling equity instead of accumulating more debt, the government aims to reduce its debt servicing burden; currently at 68% of GDP, and limit future exposure to foreign lenders, including China, which holds a significant portion of Kenya’s external debt.
From a macroeconomic standpoint, this is a shift away from reactive borrowing towards a more market-led, self-reliant model of development finance.
Public Sensitivities and Execution Risks
Despite the potential upside, the risks cannot be overlooked. Public sentiment towards privatisation in Kenya remains mixed, with concerns around job losses, asset undervaluation, and loss of state control over strategic enterprises.
Selling off infrastructure assets like the Kenya Pipeline Company could be politically charged, especially if the process lacks transparency or appears to benefit a narrow circle of investors. This is particularly relevant in a context where inflation remains high, public trust is fragile, and citizens have recently taken to the streets over economic conditions.
Execution is another major risk. The government has committed to preparing a “pipeline” of assets for IPO or public-private partnerships, but success will depend on accurate valuation, stakeholder consultation, and market readiness. Without these, the programme could stall or fail to deliver meaningful impact.
One critical tension in Kenya’s current strategy is the trade-off between attracting private investment and ensuring long-term public benefit. While private capital can drive efficiency and innovation, it also seeks profit—sometimes at odds with public service delivery.
This is especially true in sectors like health, where the government is now considering fee-per-use procurement models for equipment. Questions remain about how to protect vulnerable populations if essential services become commercialised.
As Kenya positions itself as an investment-friendly destination, it must balance investor confidence with citizen welfare and national interests. The quality of regulation, oversight, and policy continuity will determine whether this balance is struck.
The Bigger Picture: A New Model for African Economies?
Kenya’s pivot aligns with a broader trend among African economies seeking homegrown solutions to debt and development financing. Countries like Egypt, Ghana, and South Africa have also explored asset sales and domestic capital markets as alternatives to aid and loans.
If successful, Kenya could become a case study in how to creatively finance infrastructure and stimulate local investment. But failure, due to rushed execution, weak governance, or public backlash could entrench scepticism about privatisation and deepen inequality.
In the end, the success of Kenya’s new economic direction will depend not just on raising funds but on how those funds are used, who they empower, and whether they lay the foundation for inclusive, long-term growth.
