Key Highlights of the Privatization (Amendment) Bill 2025 – Now Law

Kenya has ushered in a new era of economic reform with the signing into law of the Privatization (Amendment) Bill, 2025. This legislation, which amends and effectively replaces the framework established under the Privatisation Act of 2023 (itself a repeal of the 2005 Act), aims to streamline the process of transferring public entities to private hands. Building on the 2023 Act, it introduces several key additions and refinements to enhance transparency, parliamentary oversight, and efficient use of proceeds. While retaining core elements like the establishment of a dedicated authority and structured privatization processes, it addresses emerging challenges in Kenya's evolving economy, such as constitutional alignment and fiscal responsibility.

The amendments comes at a time when Kenya is pushing for greater private sector involvement to boost efficiency and reduce fiscal burdens. Below, we break down the major additions and changes, comparing them to the previous framework (primarily drawing from the 2023 Act's foundations, which updated the 2005 version). These enhancements reflect a shift toward greater accountability, stakeholder involvement, and safeguards against misuse of public assets.

Objects, Limitations, and Guiding Principles

One of the most notable additions is a more explicit foundational structure in Part I (Preliminary). While the 2023 Act outlined basic interpretations and purposes, the new law adds:

• Objects and Purpose (Section 3): The Act now clearly states its dual objectives—to establish the Privatization Authority and to provide a streamlined regulatory framework for privatization. This addition emphasizes institutional strengthening and efficiency, which was less detailed in prior versions.
• Limitation of Application (Section 4): A new clause excludes certain transactions from the Act's scope, such as sales in secondary markets, rights issues, balance sheet reorganizations, and county government share transfers. This prevents overreach and focuses the law on core national privatizations, addressing potential overlaps not explicitly covered before.
• Guiding Principles (Section 5): Drawing directly from Kenya's Constitution, the Act introduces principles like national values (Article 10), public finance standards (Article 201), transparency, efficiency, and cost-effectiveness. This constitutional anchoring is a significant addition, ensuring privatizations align with broader governance norms—absent in the 2005 framework and only implicitly referenced in 2023.
• Purpose of Privatization (Section 6): Expanded to include encouraging private sector participation, improving infrastructure, reducing government spending, generating revenue, avoiding regulatory conflicts, broadening ownership, enhancing market responsiveness, and developing capital markets. This list refines the 2023 version by adding emphasis on capital market development and economic efficiency.

These additions aim to provide a clearer, more principled foundation, reducing ambiguity in implementation.

Strengthened Coordination and Oversight: From Commission to Authority

Part II retains the establishment of a dedicated body but renames and refines it from the "Privatisation Commission" (in 2005) to the "Privatization Authority" (consistent with 2023, but with tweaks):

• Role of the Cabinet Secretary (Section 7): A new explicit role for policy direction, coordination with international obligations, programme formulation, and Act administration. This centralizes oversight under the National Treasury, an addition that disperses some powers previously concentrated in the Commission.
• Board Composition and Functions (Sections 10-11): The Board now includes specific qualifications (e.g., degrees in economics or finance, 10 years' experience), ensuring gender and regional balance. Functions are expanded to include setting strategy, investing funds (with approval), and monitoring performance—additions that promote professionalization beyond the 2005 model's simpler setup.
• Vacancy, Delegation, and Remuneration (Sections 12-15): New provisions detail grounds for Board vacancies (e.g., bankruptcy, criminal convictions) and allow delegation to subcommittees. Remuneration is tied to Salaries and Remuneration Commission advice, adding transparency.
• Corporation Secretary (Section 17): A entirely new role for handling Board secretariat, minutes, and legal awareness—enhancing administrative efficiency not present in earlier acts.

These changes modernize governance, making the Authority more robust and accountable.

Privatization Programme: Parliamentary Approval and Validity Periods

Part III introduces significant oversight enhancements to the privatization programme:

• Approval by National Assembly (Sections 22-27): A major addition requiring the programme (formulated by the Cabinet Secretary) to be approved by the National Assembly. This includes a 30-day consideration period, specific criteria (e.g., strategic priorities, avoiding monopolies), Assembly decisions (approve, reject, or amend), notification, and Cabinet Secretary amendments. This parliamentary involvement is a key shift from the 2005/2023 models, where Cabinet approval sufficed, promoting democratic checks.
• Validity and Amendment (Sections 29-30): The programme is now valid for five years, with structured amendment processes. This adds predictability and flexibility, absent in prior laws.
• Consultation and Identification (Sections 20-21): Expanded requirements for consulting experts, affected organizations, and the public, with criteria considering government policies and strategic nature—building on but detailing the 2023 consultations.

This part's additions emphasize inclusivity and legislative scrutiny, reducing executive dominance.

Implementation and Process: Eligibility, Valuation, and Restrictions

Part IV largely aligns with previous processes but adds refinements:

• Eligibility in Privatization (Section 32): New explicit rules on who can participate, promoting fair access.
• Methods of Privatization (Section 34, Second Schedule): Retains methods like share sales and concessions but adds detail in the schedule, including public-private partnerships.
• Privatization Proposal and Approval (Sections 35-36): Proposals must now be approved by Cabinet, with implementation following finalization—adding a layer of high-level review.
• Valuation and Restrictions (Sections 38-43): Valuation is mandatory, with new controls on investments, no-credit sales, and record-keeping obligations for scheduled entities. These build on 2005 restrictions but add specificity.

These enhancements ensure competitive, transparent processes.

Privatization Agreement and Proceeds: New Fiscal Safeguards

• Agreement Provisions (Part V, Sections 44-47): Similar to prior, but adds limits on signing (e.g., after appeals) and monopoly regulation.
• Proceeds of Privatization (Part VI, Sections 48-49): A standout addition—proceeds from direct government shares go to debt reduction, infrastructure, or a Privatization Levy Fund; entity shares go back to the entity. This differs from the 2005's percentage allocations (e.g., 40% debt, 10% poverty), offering more targeted fiscal use.

Review and Appeals: From Tribunal to Board

Part VII replaces the 2005 Appeals Tribunal with a Privatisation Appeals Board:

• Review and Appeals (Sections 50-51): Authority reviews decisions, with appeals to the Board—streamlining from the old tribunal system.
• Board Establishment (Sections 52-58): New composition (chairperson, members with legal/finance expertise), vacancy rules, secretary, proceedings (Third Schedule), remuneration, and conflict of interest provisions. This adds professionalism and procedural clarity

Financial and Miscellaneous Provisions: Accountability Boost

• Financial Provisions (Part VIII, Sections 59-62): New details on funds (appropriations, fees), financial year, estimates, and audits—ensuring fiscal transparency.
• Miscellaneous (Part IX, Sections 63-69): Adds annual reports, record-keeping, personal liability protection, information obligations, confidentiality, offences (e.g., misleading officials), and regulation-making powers.
• Repeals and Transitions (Part X, Sections 70-75): Repeals the 2005 Act (noting the 2023 repeal), with transitions for ongoing privatizations, Commission members, and staff to the new Authority.