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New Law Now Requires All Foreign ICT Firms To Cede 30 Percent Ownership To Locals Before Licencing

Students at Science and Technology Park, an Incubation Hub in the University of Nairobi. [Photo/Courtesy]

International ICT companies will now be required to extend Kenyans 30 per cent stake of the business to be considered Kenyan. This is according to the recently published National Information Communication and Technology Public Policy Guidelines of 2020.

International companies with an interest in the Kenyan market will have to fulfil the 30 per cent Kenyan shareholding requirement to obtain licenses. Existing companies have been given three years to comply with the new ownership regulation, with a one-year extension by the ICT Cabinet Secretary upon request.

“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. For purposes of this rule, ICT companies without a majority Kenyan ownership will not be considered Kenyan, and may thus not be calculated as part of the 30 per cent Kenyan ownership calculus,” reads the policy in a recent Gazette Notice.

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The new regulation is part of the government efforts to grow the ICT sector in Kenya by encouraging equity participation among citizens.

The new law also stipulates that government ICT procurement processes give priority to Local ICT companies while awarding tenders, including those from the security and defense sectors. The law provides that if the local businesses cannot fulfil the tender requirements, foreign companies will be required to transfer the skills to the local firms.

“Kenyan built solutions will be preferred over any other solution; where there are no local businesses that meet the tender requirements, skills transfer to local firms and personnel will be a mandatory requirement,” continues the Gazette Notice.

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Last month, Uganda implemented an almost similar regulation requiring MTN to list at least 20 per cent of its shares on the Ugandan stock exchange prior to obtaining their permit. The same requirement was extended to all telcos in the country with a two year period to comply.

“Local ownership is important because it helps us stem capital flight which happens when the company is fully foreign-owned,” Museveni said. He also noted that repatriating all profits with little value addition and wealth creation for Ugandans is “unfair.”

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