Kenya's ICT policy opens up to foreign-owned startups

Kenya’s President, William Ruto, has reversed a rule in the country’s National Information, Communications and Technology (ICT) Policy that required ICT firms to have at least 30% substantive Kenyan ownership to be licensed.

The Equity Participation clause was added in 2019 to promote local stakeholder involvement in the digital economy and to address concerns that foreign-owned companies were getting more funding than Kenyan-owned firms.

The rule was intended to encourage equity participation among Kenyans and foster the growth of the country’s tech startups.

However, the clause hindered the growth of tech startups in the country, as startups found it harder to meet the regulatory requirements for setting up and to raise funding beyond the equity threshold. The rule also limited foreign investment in the Kenyan ICT sector.

President Ruto vetoed the Equity Participation clause at a regional business summit in Nairobi targeted at US investors, in a move that would make it easier for foreign companies to set up in Kenya without worrying about ownership status.

The decision will benefit foreign-owned companies in Kenya, who will no longer be required to sell part of their ownership to regional investors.

It is believed that Amazon persuaded President Ruto to waive the foreign ownership restrictions so that the tech giant could create a foothold in Nairobi.