The Kenyan government is attempting to maintain local control of Safaricom by imposing tough leadership demands on Vodacom Group, as the South African conglomerate moves to acquire a controlling 55 percent interest in the telco.
The government has stipulated that Safaricom's Chairman and CEO must always be Kenyan nationals.
"The company's chairman and CEO shall at all times be Kenyan citizens," Kenya said in a statement.
This specific section represents a dramatic shift in Safaricom's corporate governance, ultimately ending the era of expatriate leadership at the helm.
By reserving CEO and Chairman roles for Kenyans, the government hopes to ensure that strategic execution and boardroom leadership remain in Kenya.
The Kenyan government has decided to sell a 15% share in Safaricom. The arrangement, revealed in a public notice dated December 3, is valued at Kes 204.3 billion (US$1.6 billion) and will see the state lower its stake to fund essential infrastructure projects.
By reserving CEO and Chairman roles for Kenyans, the government hopes to ensure that strategic execution and boardroom leadership remain in Kenya.
The Kenyan government has decided to sell a 15% share in Safaricom to Vodafone Kenya Ltd.
The arrangement, revealed in a public notice dated December 3, is valued at Kes 204.3 billion (US$1.6 billion) and will see the state lower its stake to fund key infrastructure projects while retaining Vodafone's controlling control over the carrier.
According to Kenya's National Treasury Minister, John Mbadi, the planned partial divestiture was motivated by the need to mobilise non-tax revenue in a responsible and forward-thinking manner, lowering pressure on taxpayers and limiting the country's reliance on debt to fund national priorities.
‘’The proceeds will form part of the seed capital for the National Infrastructure Fund and the Sovereign Wealth Fund, helping us build the long-term financial foundations our country needs,‘’ he said.
In addition to top leadership roles, the government also secured several other clauses to preserve Safaricom’s local identity.
For instance, has been prohibited from changing Safaricom’s corporate brand, including name, trademarks, logos, without consent from the Kenyan government.
‘’There are no changes to the corporate brand of the Company, including, without limitation, any change to the “Safaricom” brand, name, trademarks, logos or associated get-up’’ the Kenyan government said in the statement
To allay fears of post-acquisition restructuring, the deal stipulates that no employee redundancies shall be declared by the company other than in the ordinary course of business.
Additionally, local businesses feeding into the Safaricom ecosystem have been protected, with a mandate that there must be no significant changes to local suppliers for at least three years following the deal's signature date.
Additionally, while Vodacom will take over majority ownership, its ability to expand Safaricom’s footprint is subject to state oversight; the firm must consult the government before supporting any expansion outside Kenya.
‘’Prior to supporting any expansion outside Kenya (excluding any existing operations outside of Kenya), consult with the GOK in respect of such expansion, prior to such expansion, provided that the GOK's consent shall not be required for Vodacom Kenya Limited's support of any expansion’’ the statement reads.
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