Kenya's Privatization Bill 2023
27 March 2023
Kenya's Privatization Bill 2023
The Kenyan cabinet approved the Privatization Bill 2023, a state-sponsored bill aimed at selling government-owned entities to the private sector without the need for Parliamentary approval.
The approval by the Cabinet means that the Ministry of Treasury will have the power to sell non-strategic parastatals without facing legal and policy bottlenecks.
purpose of the Bill
The new law is expected to contribute to the economy by allowing the private sector to own shares in the entities and reduce the demand for government resources and reliance on government financing by the parastatals.
The Bill gives power to the National Treasury to identify and determine which public enterprises will be privatized, without requiring the approvals of Parliament.
The Privatization Commission will be turned into a parastatal called the Privatization Authority, which will be domiciled at the Treasury and responsible for the implementation of the sale.
Looking forward
According to the Daily Nation Newspaper, some of the corporations that the government has earmarked for privatization include Chemelil Sugar, South Nyanza Sugar, Kabarnet Hotel, Mt Elgon Lodge, Golf Hotel, Nzoia Sugar, Miwani Sugar, Sunset Hotel Kisumu, Kenya Safari Lodges and Hotels, Consolidated Bank, Development Bank of Kenya, Agro-Chemical and Food Company, Kenya Wine Agencies, Kenya Meat Commission, and public universities.
Reactions from the public
The move has been met with mixed reactions, with some experts expressing concerns about potential job losses and reduced public oversight, while others see it as an opportunity to boost the private sector and reduce government inefficiency. Nonetheless, the government remains optimistic that the new law will lead to greater economic growth and development for the country.
CAPITAL MARKETS
1. Diageo PLC Increased Equity Stake in East African Breweries to 65%
Diageo PLC, the London-based brewer and distiller known for its popular brands including Guinness, Baileys, Tanqueray, Johnnie Walker, Smirnoff and Captain Morgan, completed a partial tender offer to increase its aggregate equity stake in East African Breweries PLC to 65% from 50%.
The transaction was made through its wholly-owned, indirect subsidiary, Diageo Kenya Ltd.
According to Diageo, the tender offer was oversubscribed, and as a result, the company applied a scale-down mechanism to purchase a pro-rate proportion of tendered shares. The move is in line with the company's strategy to acquire high-growth brands with attractive margins.
Earlier in March, Diageo announced the completion of its acquisition of Don Papa Rum, a dark rum from the Philippines, which was purchased for an initial amount of €260 million. Diageo has the potential to pay up to €177.5 million based on performance until 2028.
Looking forward
The company's recent acquisitions demonstrate its commitment to expanding its presence in the global spirits market. Diageo's strong portfolio of premium brands and strategic acquisitions have helped it maintain a leading position in the industry.
2. The Local Authorities Pension Trust (LAPTRUST) lists the first Income- Real Estate Investment Trust (I-REIT)
The listing of the LAPTRUST Imara I-REIT offers investors the opportunity to invest in a diversified portfolio of income-generating real estate assets, with expected returns from both capital growth and rental income.
Note: persons interested in investing in the closed-ended fund will be required to purchase the REIT securities in the secondary market.
details of the listing
LAPTRUST Imara I-REIT has listed 346,231,413 units on the restricted sub-segment of the main investment market segment of the Nairobi Securities Exchange (NSE).
The I-REIT, a closed-ended fund, will have a valuation of Ksh6.9 billion and each unit will be listed at Ksh20.
Looking forward
The move is expected to boost pension schemes' liquidity by unlocking value in their investments in physical assets, to benefit pensioners. Speaking during the bell-ringing ceremony to mark the listing, President William Ruto commended CPF Financial Services for developing a product that aligns with the interests of investors and with the government's transformational agenda in the capital markets.
The CPF Financial Services Group Managing Director, Hosea Kili, noted that the REITs asset class provides investors with a steady income and capital growth, making it an attractive investment option for those seeking consistent returns.
COMPANIES
M-PESA Africa has invested $2M in a Shared Service Operations Centre in Nairobi
In a bid to enhance the quality of its services, Safaricom PLC has launched the M-Pesa Africa Shared Service Operations Centre (SSOC) in Nairobi. The centre will oversee service operations and technical support for five African markets including Kenya, Tanzania, Mozambique, Lesotho and the Democratic Republic of Congo.
The M-Pesa Africa SSOC will be responsible for monitoring and resolving incidents, managing platform changes and upgrades, deploying new features and managing capacity. The centre will also coordinate with technical vendors to ensure that the platform operates efficiently and reliably.
The launch of the M-Pesa Africa SSOC is expected to strengthen Safaricom's position in the mobile money market, which has become increasingly competitive in recent years. The company's M-Pesa platform is widely used in Kenya and other African markets for a variety of financial transactions, including money transfers, bill payments and mobile banking.
With the launch of the M-Pesa Africa SSOC, Safaricom is expected to provide even better services to its customers, while expanding its reach to new markets and adding new products to the platform. The move is a clear indication that the company is committed to transforming lives through technology, and will stop at nothing to achieve its purpose.
GOVERNMENT
High Court stops Newly appointed CASs from assuming office or receiving any salary
The High Court issued an interim order suspending the appointment of 50 Chief Administrative Secretaries (CAS) in the Kenyan government. The decision comes in response to an application filed by the Law Society of Kenya (LSK) and the Katiba Institute, challenging the legality of the appointments.
According to the order issued by Justice Hedwig Ong'undi, the 50 appointees are barred from assuming office or receiving any salary, remuneration or benefits until the case is resolved. The LSK and Katiba Institute argued that the appointments violated a letter from the Head of Public Service, which requested a declaration of only 23 vacancies for the CAS positions.
The LSK and Katiba Institute have argued that the appointments were made without following due process, and have called for a review of the entire process to ensure that it is fair and transparent.
The government, on the other hand, has defended the appointments, saying that they were made in accordance with the law and the constitution.
E-MOBILITY
Kenya to receive Ksh130 Million from the African Development Bank (AfDB) under its Green Mobility for Africa (GMFA) project
Kenya is set to receive KES 130 Million ($ 1 million) from the African Development Bank (AfDB) to promote sustainable transportation options across Africa.
The funding comes under the Green Mobility for Africa (GMFA) project, which aims to accelerate and broaden private sector investment in eco-friendly transportation. The initiative aligns with the SEFA's Strategic Framework, particularly its focus on "Energy Efficiency" and aims to establish an environment for private sector investments in e-mobility.
The Green Mobility for Africa Project
The GMFA project seeks to facilitate a shift from diesel-fueled transportation modes to cleaner and more efficient alternatives that significantly reduce greenhouse gas (GHG) emissions. The program will also help African countries expand their investments in this growing sector and open the door for the Bank's direct investments.
The $1 million fund will be allocated toward three areas:
Supporting the establishment of favorable conditions for EVs and developing a portfolio of projects.
Designing an EV business model and guidelines.
Providing technical support for project preparation.
WHAT YOU MUST HAVE MISSED
EPRA Announced new electricity tariffs effective April 1
The authority increased the base rate from Ksh10 to Ksh12.22 for users consuming below 30kWh, and Kshh16.30 for 30-100 units.
Kenya and US to Hold In-Person Trade Talks in April 2023
Kenya and the United States will hold in-person trade talks from April 17 to 20, 2023. The talks will focus on proposals adopted from draft negotiations initiated in July 2022.
The two countries previously held a week of meetings on the US-Kenya Strategic Trade and Investment Partnership (STIP) in Washington. The partnership aims to develop a roadmap for engagement in areas such as agriculture, digital trade, action on climate change, and trade facilitation and customs procedures.
Kenya's E-commerce Platform, Zumi, Forced to Shut Down Due to Lack of Funding
Zumi, an e-commerce platform based in Kenya, has been forced to shut down its operations after experiencing difficulties in securing necessary funding. The company, which specialized in non-food commodities, cited a lack of sustainable funding as the primary reason for its closure.
This closure has added to the growing list of tech firms that have collapsed in recent months, significantly impacting Kenya's aspirations of becoming Africa's Silicon Savannah.
In a LinkedIn post, Zumi's CEO and co-founder, William McCarren, expressed his disappointment at the company's inability to secure sufficient funds for the business to continue. The post revealed that the closure would result in the laying off of at least 150 employees who had been instrumental in the company's operations.
Somalia to Qualify for Full Debt Relief by the End of 2023-IMF
The International Monetary Fund (IMF) has stated that Somalia will qualify for complete debt relief by the end of this year.
This is due to the progress made in implementing measures to increase revenue collection and enhance fiscal transparency.
In March 2020, Somalia made the decision to qualify for IMF debt relief as part of the Heavily Indebted Poor Countries (HIPC) Initiative. As a result, its debt burden was reduced from $5.2 billion in December 2018 to $3.7 billion.