This is the biggest deal in the evolution of the African tech systems since Bill Gates pioneered, through Windows and Intel/IBM chips, personal computing in ways anyone could participate. Yes, foreign companies planning to do business in the Kenyan ICT sector must be required to surrender 30% shareholding to Kenyans, corporates or individuals. This new ordinance is captured in the National Information Communications and Technology Policy Guidelines 2020, which was published last week, spelling out new regulatory mandates for players in the ICT sector: “It is the policy that only companies with at least 30 per cent substantive Kenyan ownership, either corporate or individual, will be licensed to provide ICT services.”
The ICT policy further says foreign companies will be given three years to meet the local equity ownership threshold, and may apply to the CS for a one-year extension with appropriate acceptable justifications. “For listed companies, the equity participation rules will conform to then extant rules of the Capital Markets Authority,” explains the policy.
“This will take the form of rules that allow companies to be licenced for certain services and only pay for the licence when they commence operations or achieve benchmark goals within predefined time frames,” explains the policy.
The State anticipates the policy will create 20 Kenyan multi-national ICT companies, 300 mid-sized firms, 5,000 small and medium enterprises and 20,000 startups.
This is expected to increase the number of startups through easing their barrier to entry. The policy also proposes a government venture capital fund that will invest in start-ups for a portion of the equity on a first-loss basis in case the startup fails.
This may not be palatable but Africa needs to have tough conversations for its future. A few weeks ago, a “Kenyan company” was acquired. As I researched for a piece, I noticed that 100% of it was owned by non-Kenyans. The Board has no single Kenyan; I decided not to run the piece as there was nothing Kenyan in it; it was a foreign company with operations in Kenya, deceiving journalists that it was “African”.
I expect Nigeria to arrive at the same conclusion by 2023. Yes, the wealth being created in the technology space today, in Nigeria, is largely not Nigerian. More than 70% are controlled outside Nigeria. From registering startups in the U.S. to using entirely foreign boards, I expect changes because if we do not act, we will get only marginal benefits as a nation. I will be happy to help the government write the brief, free, if it is serious.
I salute Kenya for this move. it is going at the root: OWN something and keep some home.---