MPs have ordered the Treasury to negotiate a fresh agreement with Vodacom Group over the sale of Safaricom to include Kenya’s entitlement to dividends based on ownership before the conclusion of the deal.
The National Assembly committees on National Planning and Finance and Public Debt & Privatisation reckon that Safaricom’s share sale agreement with Vodafone is silent on the Treasury receiving dividends from a 35 percent shareholding.
They want the Treasury to earn dividends on a 35 percent shareholding and not 20 percent, citing its directive for the deal to be concluded after the end of Safaricom’s financial year that closes at the end of March.
Vodacom inked an agreement with the Treasury in December to purchase a 15 percent stake in Safaricom for Sh204.3 billion.
The company is also paying the government an upfront dividend of Sh40.2 billion on its remaining 20 percent stake, to be recouped from the State’s future dividends.
The purchase of the Treasury’s share and those of Vodafone will lift Vodacom’s stake to 55 percent, giving the South African group effective control of Safaricom, known for its M-Pesa mobile money service.
The report from the committee says the sale agreement and Sessional Paper or Treasury document on the deal presented to Parliament was unclear whether the Treasury would receive dividends from the 15 percent stake should the deal close after Safaricom’s financial year in March.
“The Joint Committee observed that the Sessional Paper does not clearly specify entitlement to dividends declared for the 2025 financial year, particularly if the divestiture is approved and completed before Safaricom’s financial year-end on March 31, 2026,” said the joint committees in their report.
“The transaction must also clearly specify whether it is on an ex-dividend (buyer does not receive the dividend) or cum-dividend (buyer receives the dividend) basis.”
The two committees added that the absence of explicit clarification creates uncertainty regarding the fiscal implications and the effective transaction value, potentially triggering unintended revenue loss or post-completion disputes.
Safaricom has already declared an interim dividend of Sh0.85 per share for the current year, which will be paid on March 31 to shareholders who were on its books on February 25.
The Treasury will bank Sh11.92 billion from its current holding of 14.02 billion shares from the payout, while Vodacom and its British parent Vodafone will be paid Sh13.6 billion for their combined holding of 16 billion shares or 40 percent stake.
In the year to March 2024, Safaricom paid a dividend of Sh1.20 per share or Sh48.08 in total, out of which the Treasury earned Sh16.83 billion.
The company normally announces its full-year financial results and final dividend in early May, with the books for this payout closing on July 31 for payment on August 31.
With the joint committees now recommending that Parliament approve the Vodacom transaction, the South African firm will likely have the shares by the time the books close for the final dividend.
The two parties had earlier said they expect to conclude the transaction before the end of the first quarter of this year, pending all regulatory approvals.
To ensure that the government is entitled to the dividend, the committees have recommended that the transaction’s effective date of approval be April 1, 2026, or later in the year when all regulatory nods have been secured.
The MPs have cited Section 142 of the Companies Act, which says dividends declared by a company are payable to shareholders registered in its register at the time of declaration, unless the articles of association provide otherwise.
“The Joint Committee is of the view that the government should receive all dividends declared for the 2025 financial year, as it held the shares throughout the period. This entitlement is in addition to the proposed transaction consideration of Sh204 billion, which does not include the 2025 financial year dividends,” the committees said.
Facing high public debt, limited room to raise taxes, and annual debt repayments that absorb 40 percent of government revenues, President William Ruto’s administration is turning to asset sales to bolster its finances.
Vodacom will pay Sh34 per share, a 23.6 percent premium on the past six months’ weighted average price when the deal was announced in early December.
The planned sale to South Africa’s Vodacom is sharply dividing opinion in the country.
Analysts and politicians are divided on the merits of the sale, which requires legislative and regulatory approval.
Some reckoned the deal was good for Kenya, while others were sceptical about the value for the country, arguing that Vodacom remains the winner after getting full control of a cash-generative subsidiary.
On jobs, the committees noted that while the Treasury said in the sessional paper that Vodacom would protect employee redundancy rights and retain Kenyan leadership and governance structures within Safaricom, the absence of these commitments from the legally binding agreement creates a risk that they may not be fully implemented.
The MPs also want the commitment to continue supporting the Safaricom Foundation alongside social, operational, and governance safeguards outlined in the Sessional Paper.
“These commitments must be formally incorporated into the share purchase agreement and, where necessary, amended to ensure that no employee loses their job, there is continued support for the Safaricom Foundation and the retention of Kenyan leadership and governance structures within Safaricom,” said the MPs.
“Doing so will protect employees, dealers, partners, and communities, maintain stakeholder confidence, and secure the long-term social and economic benefits of the transaction.”
The committees added that no acquisition-related redundancies should occur within five years of the transaction, with the safeguards for the shared prosperity business model that supports dealers, agents, and business actors within the Safaricom ecosystem being kept in place for 10 years.
Safaricom had 6,777 employees on its books in March 2025, up from 6,652 in 2024. The company’s Kenyan operation accounted for 5,879 of these workers.
In the year to March 2025, Safaricom estimated that its network of dealers, agents and developers within the M-Pesa business sustained over one million jobs, while serving 35 million customers.
