Kenya’s president William Ruto has reversed the rule that mandates that foreign companies must have at least 30% Kenyan ownership to operate in the country.
The rule was implemented in 2020 to encourage Kenyan participation in the ICT and science and technology sector through equity ownership.
However, this may have slowed the growth of startups as the high regulatory requirements made it difficult to raise funds beyond the equity threshold.
It has also limited competition from foreign-owned companies that could not afford the heavy regulation.
Techweez has reported that the Kenyan president recently did away with the rule for tech giant Amazon which is about to set up shop in Nairobi.
However, the biggest beneficiary of this move seems to be Airtel Kenya, which no longer has to sell a portion of its stake to local investors to operate in the country.
To take you back, the rule was contained in the National Information, Communication and Technology, captured as Equity Participation, and intended to encourage 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 were 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.
Now, this rule has been reversed by President William Ruto at a regional business summit in Nairobi targeted at US investors.
