Vodacom and the World Bank have wired a combined Sh337.6 billion into government accounts, helping lift Kenya’s foreign exchange reserves to a record $15.4 billion (Sh1.99 trillion), new data shows.
The government received $1.86 billion (Sh240.5 billion) from the sale of a 15 percent stake in Safaricom and a $750 million (Sh97.1 billion) from the World Bank after the multilateral lender unfroze the billions.
This increased the reserve from $13.9billion (Sh1.8 trillion) on July 23, translating to a $1.5 billion (Sh194.1 billion) weekly jump.
The reserves stand at an equivalent of 6.4 months of import cover, surpassing Central Bank of Kenya’s (CBK’s) statutory requirements and East African Community limit of at least four and 4.5 months of import cover, respectively.
Foreign exchange reserves represent liquid assets held by a country’s central bank and serve as a buffer against external economic shocks.
The forex buffer is a boost to the State, which uses the reserves to ensure that the country can meet its international payment obligations, including servicing external debt.
The reserves also provide the central bank with the capacity to intervene in currency markets to stabilise the exchange rate when necessary.
A higher reserve level is widely viewed as a sign of improved external liquidity and stronger ability to absorb volatility in global financial markets.
Vodacom bought the 15 percent stake for Sh204 billion through a block trade on the Nairobi Securities Exchange (NSE), raising its effective holding in Safaricom to 55 percent while reducing the government’s stake to 20 percent. The transaction package rose to about Sh240.5 billion after an upfront dividend arrangement.
The government has been pursuing asset sales as part of efforts to raise resources while reducing reliance on additional borrowing.
The Treasury has disclosed that the World Bank further disbursed the $750 million under a Development Policy Operation arrangement that provides budget support alongside reforms in public financial management, governance and social protection.
The latest inflows came as the government closed one fiscal cycle and opened another, creating a concentration of payments around the transition into the new budget year as the Treasury settles obligations falling due.
The nearly Sh144 billion difference between the receipts and the weekly reserve increase points to significant foreign-currency outflows during the week. External debt service is a major call on the country’s reserves, with payments to foreign creditors made through the CBK.
The apex bank does not, however, provide a transaction-level breakdown in the weekly data showing how much of the difference was attributable to debt service. The latest reserve position follows a year of stronger foreign currency liquidity supported by Eurobond issues, diaspora remittances, tourism earnings and other inflows.
Diaspora remittances are Kenya’s largest source of hard currency ahead of tourism receipts and agriculture exports.
In April, CBK cut its projection of diaspora remittances for 2026 by Sh40.5 billion ($313 million) on the expectation of lower inflows from the Middle East due to the war and recently introduced transaction taxes in Saudi Arabia.
The apex bank expects diaspora remittances to total Sh660.3 billion ($5.1 billion) this year from an earlier estimate of Sh701.8 billion ($5.42 billion).
Inflows from the Gulf region account for roughly 10 percent of Kenya’s annual remittance inflows.
“We expect a slight deceleration because of the direct impact (of the conflict) on the remittances from the Gulf area where about 10 percent of our inflows come from,” CBK Governor Kamau Thugge said in April.
“But there are also potentially indirect effects arising from the possible economic growth slowdown in other countries, for example the US.
