Kenya’s President, William Ruto, has modified a provision 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 encourage local stakeholders to get involved in the digital economy and to address concerns that foreign-owned companies were getting more money than Kenyan-owned companies.
The rule was made to encourage Kenyans to invest in stocks and help the tech startups in the country grow.
But the clause prevented the growth of tech startups in the nation. It was difficult for startups to meet the regulatory requirements for setting up and raising funding beyond the equity threshold. The rule limited foreign investment in the Kenyan ICT sector.
President Ruto vetoed the Equity Participation Clause at a regional business meeting in Nairobi that was aimed at US investors. This will make it easier for foreign companies to shop in Kenya without worrying about ownership status.
Foreign-owned companies in Kenya will gain from the decision because they will no longer have to sell part of their ownership to investors from the region.
It is thought that Amazon convinced President Ruto to lift the limits on foreign ownership so that the tech giant could set up shop in Nairobi.