(Bloomberg) -- A Kenyan high court ruled that the nation’s privatization law is unconstitutional, the latest setback for the East African government that’s hard-pressed to diversify funding sources.
The Privatization Act passed almost a year ago didn’t undergo “meaningful” public participation during its development and sidesteps oversight by the National Assembly by providing that a transaction can come into effect if lawmakers fail to give their approval within 90 days, Judge Chacha Mwita said.
Mwita also ruled that the planned disposal of a stake in an iconic convention center in the middle of the capital city, Nairobi, violates cultural rights because the building is a national heritage.
The judgment comes on the heels of another appeals-court decision in July that said a tax law introduced last year also breached the constitution, potentially denying President William Ruto’s government even more revenue.
The privatization law was meant to accelerate the process of divesting from some state-owned companies and is part of reforms in a $3.6 billion International Monetary Fund financing package aimed at reducing Kenya’s over-reliance on borrowing.
The country intended to partly dispose off Kenya Pipeline Co., National Oil Corp. of Kenya, and New Kenya Co-operative Creameries Ltd., which are fully state-owned. It also planned to reduce shareholdings in listed firms including Standard Bank Group Ltd.’s local unit, East African Portland Cement Co., Nairobi Securities Exchange Plc, HF Group Plc, Eveready East Africa Ltd. and Liberty Kenya Holdings Ltd.
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