Govt to Sell Shares in East African Portland Cement Limited, Eveready and Four Other State Agencies

President William Ruto rings a trading bell.
President William Ruto rings a trading bell.

President William Ruto’s administration has resolved to sell shares in six key institutions as part of an ambitious plan to reshape state agencies.

Announced in a Cabinet dispatch on Tuesday, June 11, the government aims to divest 25.3 per cent of its shares and 27 per cent held by the National Social Security Fund (NSSF) in East African Portland Cement Limited, alongside significant stakes in five other companies.

The state will offload 3.36 per cent of its shares in the Nairobi Securities Exchange (NSE), 2.41 per cent in the Housing Finance Company of Kenya Limited, 1.1 per cent in Stanbic Holdings, 0.9 per cent in Liberty Kenya Holdings, and 17.2 per cent in Eveready East Africa PLC through the Kenya Development Corporation (KDC).

President Ruto has been vocal about his intention to eliminate reliance on state funding for underperforming state agencies. The cabinet asserted that this divestiture is integral to institutional reforms aimed at revitalising the economy and improving governance within state corporations.

“The divestiture in the six companies, through the sale of shares at the Nairobi Securities Exchange, will optimise the contributions of these investments in the realisation of our national development aspirations,” the Cabinet stated. This move signifies a significant shift towards reducing governmental financial burdens by selling off shares in these entities.

Cabinet meeting held at State House, Nairobi, on May 2, 2024.

The government plans to shut down 25 state corporations and transition another 25 to private sector management as part of this reform. The goal is to curb wasteful expenditure and ease the financial strain on the exchequer caused by non-performing state enterprises.

"The money some parastatals make does not belong to their boards or management. It belongs to the people of Kenya as returns on investment. We have to shut down some of those loss-making parastatals. We must end excess capacity," President Ruto declared.

The National Treasury is projected to save billions of shillings if this plan is implemented, with increased cash flow into state coffers and a reduction in exchequer outlays. 

In April, Ruto had threatened to close down loss-making government institutions within three years if they failed to improve their financial performance. This threat materialised in May when the government began merging and scrapping state corporations through the National Treasury.

The Head of State mandated parastatal Chief Executive Officers (CEOs) to slash their recurrent budgets by 30 per cent. Additionally, state-owned commercial enterprises were instructed to remit 80 per cent of their after-tax profits to the National Treasury.

"We will give you instructions on what to do with the remaining 20 per cent," Ruto stated. He also directed regulatory institutions to remit 90 per cent of their surplus funds to the National Treasury. "There will be no exceptions. Everyone must comply," he asserted.

Addressing the chairpersons and CEOs of state enterprises at State House Nairobi on Tuesday, President Ruto criticised the persistent losses of some agencies, which have become a drain on the treasury. "It is illogical. We need to close down some of these loss-making parastatals. We have to end overcapacity," he insisted, urging Kenya to adopt a more fiscally responsible approach.

"We must start living within our means and stop the habit of running huge budget deficits. In three years, we must have a balanced budget. It won't be easy, but we must do it," Ruto concluded, underscoring the gravity and urgency of the reforms needed to steer Kenya towards a more sustainable economic future.

President William Ruto at a meeting with MPs from Meru County, June 10.