NAIROBI, Kenya – All money raised from the sale of State-owned enterprises will now be channelled directly to the Consolidated Fund in a sweeping reform aimed at tightening fiscal discipline and easing pressure on Kenya’s overstretched Exchequer.
This follows the enactment of the Privatisation Act, 2025, which comes into effect on November 4, and marks a sharp departure from the previous 2005 law that allowed proceeds from the sale of public entities to first settle debts, cover transaction costs, or fund capital projects before remitting any surplus to the Treasury.
Under the new law, “any proceeds from the sale of a direct National Government shareholding shall be paid into the Consolidated Fund,” meaning billions of shillings generated from privatisation will now be routed straight into the government’s main account.
The Treasury hopes the changes will strengthen revenue collection and transparency as it races to close a projected Sh876.1 billion budget deficit in the current financial year.
Debt burden driving reforms
Kenya’s public finances remain under severe strain, with debt repayments consuming 92 per cent of tax revenues last year, leaving little room for development spending.
The government is targeting to raise at least Sh149 billion in the 2025/26 fiscal year from privatisation and related asset sales to plug funding gaps and reduce borrowing needs.
Money in the Consolidated Fund is used to pay public debt, pensions, and salaries for constitutional office holders.
Withdrawals from the account can only be made with the approval of the Controller of Budget, ensuring stricter oversight of how proceeds are spent.
Privatisation pipeline
The Treasury has lined up the sale of at least 11 State corporations, including the Kenya Pipeline Company (KPC), National Oil Corporation of Kenya, Kenyatta International Convention Centre (KICC), Rivatex East Africa, and New Kenya Co-operative Creameries (New KCC).
KPC is expected to be among the first to go under the hammer by March 2026, with the government eyeing at least Sh100 billion from the sale of its 65 per cent stake.
Most of the targeted entities are loss-making and heavily reliant on Treasury bailouts to stay afloat, underscoring the administration’s push to offload them and channel the proceeds directly to the Exchequer.
Officials say the new privatisation framework is part of broader fiscal reforms meant to stabilise public finances, enhance accountability, and wean struggling parastatals off the national budget.
