Safaricom’s shares sale outran the Constitution. The Court has ordered them back

A fruit seller in Nairobi will still receive an M-PESA payment tonight. A matatu passenger will still send fare. A parent will still pay school fees, and a chemist will still accept a till number. The High Court has not switched off Safaricom, interrupted its network or placed its managers under judicial control.

It has changed the ownership question beneath those ordinary transactions.

On 15 September, a three-judge bench of the High Court nullified the Government of Kenya’s sale of a 15 percent stake in Safaricom to Vodacom and ordered the shares restored to the State. The bench found that the process failed the constitutional requirements of meaningful public participation and transparency. It quashed the approvals and arrangements that enabled the transfer.

The judgment returns more than six billion Safaricom PLC shares to the public balance sheet. It also turns a warning into an instruction. In June, the Court of Appeal allowed the transaction to proceed on the basis that the shares could be returned and the purchase money refunded if the petitioners ultimately succeeded. The petitioners have succeeded. The reversal once described as possible must now be carried out unless a higher court suspends or overturns the orders.

FINTAK argued before completion that a public asset should not move faster than the Constitution. The shares moved on 30 June. The constitutional judgment arrived eleven weeks later and called them back.

A sale completed under a live petition.

The National Treasury announced the transaction in December 2025. Vodacom, through Vodafone Kenya Limited, would buy 15 percent of Safaricom from the Government at KSh34 a share for KSh204.3 billion. A separate dividend purchase agreement promised the State KSh40.2 billion upfront in place of part of the future dividends on its remaining 20 percent holding. The total package was presented as KSh244.5 billion for infrastructure and sovereign investment.

Parliament approved the divestiture in March 2026. Its committees held public hearings, but participants repeatedly sought the valuation reports, buyer-selection criteria, due-diligence findings, transaction advice, and fuller deal documents. A hearing can collect public voices without allowing those voices to interrogate the information on which the decision rests. Citizens were asked whether a transaction should proceed without being given every material document required to test its price, terms, and alternatives.

The High Court froze the proposed sale on 18 May while the constitutional petitions were determined. On 26 June, the Court of Appeal stayed that order. It did not find the sale lawful. It decided that the government’s proposed appeal raised arguable questions and that the transaction could be reversed if the petitioners later won.

The block trade was completed on 30 June. Vodafone Kenya Limited acquired the State’s 15 percent, while Vodacom completed a separate acquisition that gave it the remaining interest in Vodafone Kenya Limited. Vodacom’s effective interest in Safaricom rose to 55 percent, the Government’s fell from 35 percent to 20 percent, and public investors retained 25 percent.

The merits petition did not disappear when the trade settled. The High Court has now decided it.

The court drew a line around executive power.

The judgment invalidates the process used for this transaction. It does not prohibit every future sale of Safaricom shares, declare Vodacom an unsuitable investor or establish that KSh34 was an unfair price. Those questions occupied much of the public argument, but the decisive constitutional failure lay in how the state obtained authority to dispose of the stake.

Public participation under Article 10 is not a ceremonial tour through county halls. It requires timely access to enough information for citizens to make informed submissions and a process capable of considering those submissions before the decision becomes irreversible. Article 201 subjects public finance to openness, accountability, and public participation. Article 35 protects access to information held by the State, subject to lawful limits. Parliament cannot cure missing disclosure by counting meetings, memoranda or attendees.

The State had already selected the buyer, negotiated the price and assembled the transaction before much of the public process unfolded. The public could react to the package. It could not compare competing offers because none had been invited. It could not independently test transaction documents that had not been fully disclosed. It could not know which alternatives had been rejected and on what financial assumptions.

Approvals built through an unconstitutional process cannot support a valid transfer merely because the transfer was completed before judgment.

Reversal is a corporate operation, not a slogan.

The order to restore the shares begins a chain of legal, financial, and accounting work.

Vodafone Kenya Limited acquired the 15 percent stake through a block trade on the Nairobi Securities Exchange. Reversal will require the share register, depository records, and beneficial ownership position to reflect the Government’s restored interest.

If the order reaches only the Government’s 15 percent sale, the state returns to 35 percent, Vodafone Kenya Limited falls from 55 percent to 40 percent, and the public remains at 25 percent. The separate transaction through which Vodacom acquired the remaining interest in Vodafone Kenya Limited needs to be read against the court’s final written orders before anyone claims that it has also been undone.

The money must move in the opposite direction. The purchase consideration for the State’s shares was KSh204.3 billion. Public reporting in mid-July said the funds had not yet reached State coffers, while later accounts said the Treasury had received the wider transaction proceeds. The Treasury and Vodacom now owe the public a joint reconciliation showing the settlement date, amount received, account used, any conversion costs, interest earned, expenditure or commitments already made, and the timetable for any refund.

The KSh40.2 billion dividend purchase agreement needs separate treatment. Parliament approved it alongside the share purchase agreement, but it monetized future dividends on the State’s retained stake rather than paying for the 15 percent transferred. The written judgment must establish whether that agreement falls within the arrangements quashed by the court. Treasury should not fold both sums into one headline figure when their legal character and reversal mechanics differ.

Safaricom paid a final dividend of KSh1.15 a share in early September to shareholders registered on 4 August. The sold stake represented roughly 6.01 billion shares, equivalent to about KSh6.91 billion at that dividend rate. The transaction documents and shareholder register will determine who received that distribution and whether the reversal order requires an adjustment.

Voting rights, distributions, taxes, transaction fees, and professional charges incurred during the period of transferred ownership also need an auditable account.

None of this requires Safaricom to stop serving customers. Its licences, employees, contracts, towers, agent network and payment systems remain in operation. The judgment changes title to shares and the authority behind the transaction, not the validity of an M-PESA payment made at a kiosk.

The fiscal hole cannot be hidden in the refund.

The Government sold because it wanted capital without adding conventional debt. Treasury described the KSh244.5 billion package as seed money for the National Infrastructure Fund and the Sovereign Wealth Fund. It cited a 23.6 percent premium to the six-month volume-weighted average market price and argued that a retained 20 percent stake, board representation and contractual protections would preserve Kenya’s strategic interests.

That was an economic case for divestiture. It was not permission to abbreviate constitutional process.

If the money has entered the National Infrastructure Fund, the fund must disclose whether any amount has been allocated, invested, pledged or spent. A refund financed through fresh borrowing would convert a transaction sold as an alternative to debt into a new fiscal obligation. A refund taken from current revenue would compete with services and development expenditure. A negotiated delay would leave the state owing a private counterparty while the ownership record remains under court order.

Treasury must publish the cash position before announcing an appeal. Investors and citizens need to know whether the state can comply immediately, whether funds remain intact, and whether any projects were contracted against money now liable to return to Vodacom.

The advisory costs also survive unless contracts provide otherwise. Parliament was told that transaction advisers and lawyers could receive more than KSh3 billion. The public should not pay a success fee for an invalid sale without seeing the engagement terms, the conditions for payment, and the advice given on litigation risk.

The fiscal cost of reversal did not originate in the judgment. It arose when the transaction was closed while the legality of its foundation remained undecided.

The buyer accepted a visible litigation risk.

Vodacom did not enter an ordinary uncontested acquisition. The May conservatory order, the June appeal and the continuing merits hearing were public. The Court of Appeal expressly declined to decide whether the sale was lawful and recorded restoration and refund as available remedies.

Completion transferred market risk from delay into legal risk from reversal. Vodacom gained the shares sooner, but accepted the possibility that the title would not survive the constitutional case. Its shareholders now need disclosure on the amount recoverable, the treatment of dividends and costs, the effect on control of Safaricom, the accounting consequences, and the next appellate step.

The Government may appeal, and Vodacom or other affected parties may seek a stay. Filing an appeal does not by itself erase the High Court’s orders. Any court asked to suspend reversal will have to weigh commercial disruption against the constitutional breach already found after a full hearing.

Investor confidence cannot be reduced to whether a large transaction closes on schedule. Predictable constitutional review protects an investor from political reversal, contested title and public hostility after closing. Capital is safest when the seller has authority, the process is open and the legal challenge is resolved before settlement.

Safaricom remains strategic after the judgment.

Safaricom combines a profitable listed company with communications, payments, credit, commerce, and public-service collections across a common network. M-PESA is privately operated, regulated infrastructure embedded in the daily functioning of households, businesses, and government. A change in control therefore reaches beyond the usual concerns of minority shareholders.

Government ownership alone does not guarantee low prices, open access, privacy or resilient systems. A 35 percent state stake cannot substitute for effective competition law, data protection, interoperability, cybersecurity and payment-system supervision. The restored shares nevertheless recover a large public economic interest and a stronger position in decisions affecting an infrastructure company whose failures or exclusions can travel through the wider economy.

Kenya should use the interval created by the judgment to separate two questions that were compressed into one deal. The first is whether the state should sell part of a valuable holding to finance infrastructure. The second is what protections should apply whenever control of a nationally important communications and payment platform changes. The second question remains even if the first sale never returns.

The Central Bank’s proposed fast payment system should proceed as public infrastructure with fair access for banks, mobile-money operators, and fintechs. Competition authorities should enforce practical interoperability across accounts, wallets, merchants and agents. Data-protection and cybersecurity rules should attach to the platform and its functions, regardless of the nationality of any shareholder. Change-of-control review should test operational resilience, market access, data governance, and national-security obligations before a strategic transfer is approved.

Contractual promises on headquarters, jobs, management and business partners may supplement those protections. They cannot replace rules enforceable by regulators, competitors, workers and customers.

A lawful sale would need a different process.

If the Government returns with another proposal, it should not repeat the first transaction with a longer public notice.

An independent valuation should be published with its date, assumptions, and range. The State should disclose the value of expected dividends under several scenarios and compare the proposed sale with borrowing, a domestic public offer, a strategic placement, and retaining the shares. Any legitimate commercial redactions should be narrow and explained.

Competitive price discovery should be the default for a block of this size. An existing strategic shareholder may offer the strongest industrial logic, but that position should be tested against other credible capital rather than presumed. A negotiated premium to yesterday’s traded price does not capture the full value of control, scarcity, information access, or future cashflows.

Parliament should receive the complete economic package before approval, including the share purchase agreement, dividend arrangements, advisory fees, change-of-control protections, use-of-proceeds framework and enforcement terms. Public participation should begin while options remain open, not after the buyer and principal terms have been settled.

The destination of the money should be governed before the asset leaves the State. Ring-fenced proceeds, project selection rules, procurement controls, quarterly reporting and independent audit would allow citizens to trace a permanent asset into permanent public capital. A promise to spend proceeds on infrastructure is not the same as a legal chain from sale account to completed project.

The strongest safeguard is disciplined sequencing. Complete disclosure. Hear the public. Test the price. Secure Parliament’s informed approval. Resolve live constitutional challenges. Transfer the shares last.

The shares have returned to where the argument began.

In our letter to the President, we asked for a pause until Kenyans could see the full value, the full terms and the full national-interest case. The pause did not come. In our later analysis, we warned that the sale would likely close while the petition travelled towards a judgment with nothing left to protect.

The Court of Appeal preserved a remedy on paper. The High Court has now used it.

The Government should comply with the restoration order, publish the financial reconciliation and then exercise any right of appeal in the open. It should not ask taxpayers to accept secrecy on the ground that disclosure may weaken its litigation position. The public owns the restored stake and will bear the cost of every refund, fee and financing decision that follows.

Tonight, the fruit seller will see the same M-PESA confirmation on her phone. Beneath it, the State’s ownership has changed twice in eleven weeks because the sale was allowed to outrun the case testing its legality.

The shares can be restored. Lost time, transaction costs and institutional trust are harder to recover.

Kenya should not sell them again until the process is worthy of the asset.

𝑃𝑢𝑏𝑙𝑖𝑐𝑎𝑡𝑖𝑜𝑛 𝑛𝑜𝑡𝑒

𝑇ℎ𝑖𝑠 𝑒𝑑𝑖𝑡𝑖𝑜𝑛 𝑟𝑒𝑓𝑙𝑒𝑐𝑡𝑠 𝑡ℎ𝑒 𝑜𝑟𝑑𝑒𝑟𝑠 𝑑𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑 𝑏𝑦 𝑡ℎ𝑒 𝐻𝑖𝑔ℎ 𝐶𝑜𝑢𝑟𝑡 𝑜𝑛 15 𝑆𝑒𝑝𝑡𝑒𝑚𝑏𝑒𝑟 2026 𝑎𝑛𝑑 𝑡ℎ𝑒 𝑝𝑢𝑏𝑙𝑖𝑐 𝑟𝑒𝑐𝑜𝑟𝑑 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑡ℎ𝑎𝑡 𝑑𝑎𝑦. 𝑇ℎ𝑒 𝑓𝑢𝑙𝑙 𝑤𝑟𝑖𝑡𝑡𝑒𝑛 𝑗𝑢𝑑𝑔𝑚𝑒𝑛𝑡 ℎ𝑎𝑑 𝑛𝑜𝑡 𝑎𝑝𝑝𝑒𝑎𝑟𝑒𝑑 𝑜𝑛 𝐾𝑒𝑛𝑦𝑎 𝐿𝑎𝑤 𝑤ℎ𝑒𝑛 𝑡ℎ𝑖𝑠 𝑒𝑑𝑖𝑡𝑖𝑜𝑛 𝑤𝑎𝑠 𝑐𝑜𝑚𝑝𝑙𝑒𝑡𝑒𝑑. 𝑃𝑟𝑒𝑐𝑢𝑟𝑠𝑜𝑟 𝑤𝑖𝑙𝑙 𝑢𝑝𝑑𝑎𝑡𝑒 𝑎𝑛𝑦 𝑑𝑒𝑠𝑐𝑟𝑖𝑝𝑡𝑖𝑜𝑛 𝑜𝑓 𝑡ℎ𝑒 𝑐𝑜𝑢𝑟𝑡’𝑠 𝑟𝑒𝑎𝑠𝑜𝑛𝑠 𝑜𝑟 𝑐𝑜𝑛𝑠𝑒𝑞𝑢𝑒𝑛𝑡𝑖𝑎𝑙 𝑜𝑟𝑑𝑒𝑟𝑠 𝑖𝑓 𝑡ℎ𝑒 𝑠𝑖𝑔𝑛𝑒𝑑 𝑑𝑒𝑐𝑖𝑠𝑖𝑜𝑛 𝑎𝑑𝑑𝑠 𝑜𝑟 𝑛𝑎𝑟𝑟𝑜𝑤𝑠 𝑎 𝑚𝑎𝑡𝑒𝑟𝑖𝑎𝑙 𝑝𝑜𝑖𝑛𝑡.

𝑃𝑟𝑒𝑐𝑢𝑟𝑠𝑜𝑟 𝑖𝑠 𝑝𝑢𝑏𝑙𝑖𝑠ℎ𝑒𝑑 𝑏𝑦 𝑡ℎ𝑒 𝐹𝑖𝑛𝑇𝑒𝑐ℎ 𝐴𝑠𝑠𝑜𝑐𝑖𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 𝐾𝑒𝑛𝑦𝑎. 𝐼𝑛𝑡𝑒𝑙𝑙𝑖𝑔𝑒𝑛𝑐𝑒 𝑜𝑛 𝑤ℎ𝑎𝑡 𝑚𝑜𝑣𝑒𝑠 𝐴𝑓𝑟𝑖𝑐𝑎𝑛 𝑓𝑖𝑛𝑎𝑛𝑐𝑒 𝑛𝑒𝑥𝑡.