Court of Appeal rejects State, Vodacom bid to suspend ruling nullifying Sh204.3b Safaricom sale

Court rejects State, Vodacom bid to suspend ruling cancelling Sh204.3bn Safaricom sale. [Courtesy]

President William Ruto’s administration has suffered a major legal setback after the Court of Appeal declined to suspend a High Court judgment nullifying the Sh204.3 billion Safaricom share sale to Vodacom.

A three-judge bench comprising Justices Luka Kiprotich Kimaru, Johnson Okello and Kathurima M’Inoti rejected the government’s and Vodacom's application for a stay of the September 15, 2026 judgment, leaving the orders restoring the 15 per cent stake to government ownership in force.

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

The decision is a setback for the government and Vodacom, who sought to halt implementation of the judgment through the Office of the Attorney General pending the hearing and determination of their intended appeal.

The application was opposed by Tony Gachoka and other petitioners who challenged the legality of the transaction.

The dispute centres on the transfer of 6,009,814,200 ordinary Safaricom shares, representing 15 per cent of the government’s shareholding, to Vodafone Kenya Limited, a subsidiary of the Vodacom group.

In its September 15 judgment, a three-judge High Court bench comprising Justices Francis Gikonyo, Roselyn Aburili and Teresia Wanjiku Ouya declared the divestiture unconstitutional and invalid, null and void.

The court also quashed the decision contained in Sessional Paper No. 3 of 2025, together with related approvals and agreements, and ordered the shares restored to government ownership.

The transaction was completed on July 6, 2026, with the government receiving approximately Sh204.3 billion for the shares and a further Sh40.168 billion paid in lieu of future dividends on its retained shareholding.

In seeking a stay, the Attorney General Dorcas Odour argued that implementing the judgment before the appeal was heard could make the intended appeal ineffective and complicate the reversal of the completed transaction.

In an affidavit supporting the application, Treasury Cabinet Secretary John Mbadi said the shares had already been transferred and that reversing the transaction would involve settled entries in the Central Depository and Settlement Corporation, as well as cross-border regulatory approvals.

The government warned that the judgment could disrupt fiscal planning, investor confidence and the country’s foreign-exchange position.

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

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

The government further argued that the High Court’s orders affected third parties, including investors holding Safaricom’s publicly traded shares.

Gachoka and other petitioners questioned the legality of the transaction, public participation, valuation and the procedures followed in approving the sale.

The government maintained that the transaction had received the necessary approvals and was intended to raise funds for infrastructure development through the National Infrastructure Fund.