Cabinet approves privatisation of Development Bank of Kenya and 5 state hotels

In a move to rejuvenate the economy and alleviate public debt, the government has unveiled plans to privatize the Development Bank of Kenya (DBK) along with five government-operated hotels.

During a cabinet meeting chaired by President William Ruto, the decision to privatize DBK was greenlit, with the cabinet acknowledging the bank's transition into a fully-fledged commercial entity regulated by the Central Bank of Kenya (CBK).

Additionally, the cabinet approved the divestment of five non-strategic hotels, including Kenya Safari Lodges and Hotels Limited (incorporating Mombasa Beach Hotel, Ngulia Safari Lodge, and Voi Safari Lodge), Golf Hotel Limited, Sunset Hotel Limited, Mt. Elgon Lodge Limited and Kabarnet Hotel Limited.

This move aims to invigorate the hospitality industry, enticing private sector investments while fostering job creation and business prospects in the tourism sector, which has been striving to recover from the aftermath of the Covid-19 pandemic.

Development Bank of Kenya Development Bank of Kenya Pulse Live Kenya

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The despatch from the cabinet said, "As part of the Administration’s plan to steer the turnaround of our State Corporations and other State Owned Enterprises by unlocking their potential and securing the best value for the public, Cabinet considered and approved the proposed privatization of the Development Bank of Kenya (DBK).

The decision to privatize DBK and the hotels aligns with the ongoing resurgence of the tourism sector, propelled by Kenya's visa-free entry regime, aiming to spur growth within the hospitality industry through private-sector investments.

While specifics regarding revenue projections and sale timelines were not disclosed, the government's motive to curtail fiscal deficits and public debt, exacerbated by escalating borrowings, underscores the urgency for reform.

Cabinet Secretaries during a Cabinet meeting at State House Cabinet Secretaries during a Cabinet meeting at State House Pulse Live Kenya

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The privatization of DBK and the hotels represents a fraction of the government's broader initiative to overhaul the state-owned sector, encompassing over 200 entities across various domains like energy, transport, agriculture, and manufacturing.

Other state-owned enterprises earmarked for potential privatization or restructuring include Kenya Airways, Kenya Power, Kenya Ports Authority, and Kenya Pipeline Company, as part of the government's comprehensive reform agenda.