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Foreign ICT Companies to Have 30% Local Shareholding under New Kenyan Law

The regulation is part of the Kenyan government's efforts to grow the ICT Sector in the country, by encouraging equity participation among Kenyans.

ICT companies from abroad with interest in the Kenyan market now have to give Kenyans a 30% stake to be considered as Kenyan companies. The recently published National Information Communication and Technology Public Policy Guidelines of 2020, push for a local stake as a requirement to obtain licenses in the country.

“It is the policy that only companies with at least 30% 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% Kenyan ownership calculus,” reads the policy in a recent Gazette Notice.

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The regulation is part of a government effort to grow the ICT Sector in the country, by encouraging equity participation among Kenyans. Companies now have 3 years to comply with the local ownership regulations. The time frame is subject a one-year extension by the ICT Cabinet Secretary upon request.

Listed companies will conform to equity participation rule “to the extant rules of the Capital Markets Authority.”

Local ICT Companies to Receive Preferential Treatment for ICT Tenders

The new law says that government ICT procurement processes will give preference to local ICT companies in the award of tenders, including in sectors like security and defence. Further, where local businesses cannot fulfil tender requirements, foreign companies will have to transfer skills and personal to 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.”