Cabinet approves sale of Development Bank, prime hotels

President Ruto chairs a cabinet meeting at State House, Nairobi. [PCS]

The Cabinet has approved the privatisation of the Development Bank of Kenya (DBK) as well as 8 other prime hotels located in popular tourist destinations in the country. 

At the same time, the Cabinet is scheduled for the Annual Retreat of the National Executive.

A Cabinet dispatch said: "The retreat is expected to review the performance of all Ministries and State Offices and map out the priorities for the year 2024, which will be codified in the Ministerial Performance Contracts."

"This year’s retreat has been preceded by a Ministerial Performance Review (Roadshow) under the stewardship of the Ministry of Public Service, Performance, and Delivery Management, in conjunction with the Cabinet Office."

The privatization of DBK comes after the bank successfully transitioned into a fully-fledged deposit-taking commercial bank regulated by the Central Bank of Kenya (CBK).

The Cabinet dispatch stated that the decision was motivated by the desire to stimulate private-sector investment  and foster the expansion of the nation's hospitality industry.

The Cabinet has also approved the privatisation of non-strategic commercial state-owned enterprises such as the Golf Hotel which was valued at Sh627 million in 2019, and Sunset Hotel with a Sh380 million price tag. The inventory also includes the once famous Kabarnet Hotel which is valued at Sh117 million

Mt Elgon Lodge, which was valued at Sh112.4 million in a 2019 valuation had been closed for renovation and is now in need of an operator or a buyer.

Also in the pot are Mombasa Beach Hotel, Kenya Safari Beach Hotels and the Voi Safari Lodge, whose values were not disclosed.

"The privatization of these enterprises is anticipated to fuel growth in the tourism sector, aligning with the ongoing rebound experienced by the industry due to the Visa-Free entry regime in Kenya," said the release.

"These divestitures are expected to stimulate the expansion of our nation's hospitality industry and grow the individual units through private sector investment. This move aligns with the ongoing rebound of the tourism sector that has been buoyed by the Visa-Free entry regime in Kenya, and promises to deliver increased employment and business opportunities in both the divested enterprises as well as across the entire tourism sector."

During the Cabinet meeting at State House, Nairobi, on Wednesday, the government paid tribute to Kelvin Kiptum, OGW, and his coach Gervais Hakizimana, who died in a road accident on February 11.

The government had previously conferred upon him the Order of the Grand Warrior (OGW) for breaking the record in the Chicago marathon on October 8, 2023.

The government announced support for Kiptum's family to ensure a befitting send-off.

The Cabinet also took note of ongoing interventions by the Ministry of Sports to better protect the country's sporting icons, urging all road users to adhere to traffic laws to prevent tragic accidents in the future.

The release said that the Cabinet meeting also celebrated significant economic milestones, including the successful placement of a USD 1.5 billion Eurobond.

"The oversubscription of the Eurobond affirmed investors' confidence in the Administration's economic turnaround strategy. This success positions the country to buy back Kenya's existing USD 2 billion Eurobonds due later this year," said the release.

On the fiscal front, the Cabinet considered various public finance memoranda, including the 2024 Budget Policy Statement and the Medium-Term Debt Management Strategy.

The 2024 Budget Policy Statement, themed "Sustaining Bottom-Up Economic Transformation Agenda for Economic Recovery and Improved Livelihoods," outlines policies and strategies aligned with the Fourth Medium-Term Plan.

The fiscal policy for the Financial Year 2024/2025 aims to support the Bottom-Up Economic Transformation Agenda (BETA) through growth-friendly fiscal consolidation, enhanced revenue mobilization, and austerity measures.

Moreover, the Cabinet approved proposed amendments to the Public Finance Management Act, addressing issues related to the timing of county-level Finance Bills and the approval process to prevent financial lapses.

Climate Action, Education Digitization, and Agriculture Transformation
The Cabinet underscored its commitment to addressing climate change by ratifying the implementation of the Financing Locally Led Climate Action Programme (FLLoCA).

"This collaborative initiative with development partners aims to support Kenya's transition to a low-carbon and climate-resilient development pathway," the release said.

In a move to align with the government's digital transformation agenda, the Cabinet approved the digitization of the entire education system, spanning from basic education to tertiary and university levels.

The release said that the initiative aims to address governance challenges within the education system, promote transparency, and curb fraudulent activities. To support the livelihoods of coffee farmers, the Cabinet approved a framework to enhance the coffee sub-sectors' access to subsidised government fertiliser and expedite the processing of farmer payouts through the Coffee Cherry Advance Fund.

The Cabinet gave the green light to the Kenya Agricultural Business Development Project (KABDP), supporting 29 agricultural value chains and aiming to improve incomes, ensure sustainable food security, enhance entrepreneurial skills, and strengthen coordination across all 47 counties.

The Cabinet also approved the implementation of the Nairobi Intelligent Transport System (ITS) Establishment and Junction Improvement Project to help  combat traffic congestion in Nairobi, by eliminating human interfaces and streamlining penalty payments for traffic offences.