Appeal court deals blow to Sh204.3bn Safaricom shares sale

The government and Vodacom have suffered a legal setback after the Court of Appeal refused to suspend a High Court decision that nullified the Sh204.3 billion sale of the State’s 15 per cent stake in Safaricom.

On Tuesday, a three-judge bench comprising Justices Luka Kimaru, Francis Tuiyott and Kathurima M’Inoti rejected applications by the government and Vodacom to suspend the September 15 judgement pending an appeal.

“We therefore reject the government’s and Vodacom’s applications to suspend the High Court judgement pending the determination of their intended appeal for lack of merit,” the judges ruled.

The decision leaves in force the orders declaring the transaction unconstitutional and directing that the 6,009,814,200 ordinary shares be restored to government ownership.

The dispute arose from the transfer of the shares, representing 15 per cent of the government’s shareholding in Safaricom, to Vodafone Kenya Ltd, a subsidiary of the Vodacom Group.

In its September 15 judgement, the High Court declared the divestiture unconstitutional, invalid, null and void.

Justices Francis Gikonyo, Roselyn Aburili and Teresia Wanjiku also quashed Sessional Paper No. 3 of 2025 and related approvals and agreements underpinning the transaction.

The sale was completed on July 6, with the government receiving about Sh204.3 billion for the shares. A further Sh40.168 billion was paid in lieu of future dividends on the State’s retained shareholding.

Attorney General Dorcas Oduor had asked the Court of Appeal to suspend the judgment, arguing that implementing the orders before the intended appeal was heard could undermine the appeal and complicate efforts to reverse the transaction.

Treasury Cabinet Secretary John Mbadi, in an affidavit supporting the application, said the shares had already been transferred and that reversing the transaction would involve settled entries at the Central Depository and Settlement Corporation.

He also cited the need to address cross-border regulatory approvals, warning that reversing the deal could have wider implications for fiscal planning, investor confidence and the country’s foreign-exchange position.

The government further argued that the transaction had generated foreign-currency inflows of approximately US$1.557 billion and that reversing it could require the repayment or withdrawal of a substantial capital inflow.

The State maintained that its intended appeal raised important legal questions, including the interpretation of Section 87A of the Public Finance Management Act, Parliament’s role in approving the sale and the High Court’s decision to quash regulatory approvals.

The application was opposed by Tony Gachoka and other petitioners, who challenged the legality of the transaction, including the public participation process, valuation and procedures followed in approving the sale.