Foreign Tech Companies No Longer Needed to Relinquish 30 Percent Ownership to Kenyans 

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The National Information, Communications, and Technology (ICT) Policy was introduced in 2019 to promote universal access to ICT infrastructure and services in Kenya.

The policy was reviewed in 2006 to include elements that matched global trends and changing public needs.

The main goal of the policy was to create an enabling environment for all citizens and stakeholders to realize the potential of Kenya’s digital economy. It aimed to meet various objectives such as creating infrastructure for high-speed internet access, supporting data centres and machine learning, increasing ICT contributions to the economy, fostering an innovation ecosystem, and improving public service delivery.

The policy was gazetted on August 7, 2020, and sought to position Kenya to harness global opportunities and gain global recognition for innovation, efficiency, and quality in public service delivery.

To take you back, the Policy has a clause called Equity Participation that encourages Kenyan participation in the ICT and Science and Technology sector through equity ownership.

The policy states that only companies with at least 30% substantive Kenyan ownership, either corporate or individual, should be licensed to provide ICT services.

Licensees would have been given three years to meet the local equity ownership threshold and could apply to the Cabinet Secretary of ICT for a one-year extension with acceptable justifications. The equity participation rules for listed companies were said to conform to the Capital Markets Authority’s rules. The policy, at that time, sought to promote Kenyan ownership and participation in the ICT sector.

Now, this rule has been reversed by President William Ruto at a regional business summit in Nairobi targeted at US investors.

We had faulted the move before in an earlier post. For instance, many Kenyans still believe that the ICT policy was focused on the issue of ownership due to the significant number of foreign-owned ICT companies and start-ups in Kenya.

These companies are also said to have non-Kenyan board members and upper management. The policy mandated that ICT companies have at least 30% Kenyan ownership to operate in the country – however, this may have hindered the growth of startups by increasing regulatory requirements and making it difficult to raise funds beyond the equity threshold.

This policy had also assumed that local ICT firms would thrive without competition from foreign-owned companies, which may not have been necessarily true.

Perhaps the biggest beneficiary of this move is Airtel Kenya. Specifically, the requirement for Airtel Kenya to sell a portion of its stake to local investors has now been reversed.

Reportedly, e-commerce giant Amazon convinced President William Ruto to abandon the foreign ownership rules in order for the tech giant to establish a presence in Nairobi.

The outcome of this development will be seen in due time.