Kenya’s High Court has ruled that the country’s Privatization Act, passed nearly a year ago, is unconstitutional, a decision underscoring concerns over the lack of public engagement and potential infringement on cultural rights, Bloomberg reports.
The ruling, which comes amidst a broader economic reform agenda spearheaded by President William Ruto, raises serious questions about the government’s ability to diversify funding sources and implement key elements of the International Monetary Fund (IMF) financing package.
The Privatization Act, intended to accelerate the sale of state-owned companies, was criticized for its limited public consultation and bypassing of parliamentary oversight. Judge Mwita stated that the law failed to undergo “meaningful” public participation and sidestepped the National Assembly by allowing transactions to come into effect automatically if lawmakers failed to approve them within 90 days.
The court also deemed the proposed sale of a stake in the iconic Kenyatta International Convention Centre (KICC) in Nairobi to violate cultural rights. The KICC, a prominent landmark in the capital city, is considered a national heritage site.
This decision comes on the heels of another appeals court ruling in July, which declared a tax law introduced last year unconstitutional, potentially further hampering the government’s revenue generation efforts.
The Privatization Act aimed to facilitate the partial divestment of companies like Kenya Pipeline Co., National Oil Corp. of Kenya, and New Kenya Co-operative Creameries Ltd. The government also planned to reduce its shareholdings in listed firms including Standard Bank Group Ltd.’s Kenyan unit, East African Portland Cement Co., Nairobi Securities Exchange Plc, HF Group Plc, Eveready East Africa Ltd., and Liberty Kenya Holdings Ltd.
The court’s decision throws a wrench into the government’s reform plans, which are heavily reliant on the $3.6 billion IMF financing package aimed at reducing Kenya’s reliance on borrowing.
