Kenya Gazettes A New Law Requiring Foreign ICT Companies To Have A 30pc Local Shareholding

In a new gazette notice, Kenya now requires that all foreign ICT companies must have at least a 30 percent local shareholding.

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Following the recently published National Information Communication and Technology Public Policy Guidelines of 2020, ICT companies from abroad will now give Kenyans a 30 percent stake to be considered Kenyan.

The international companies with an interest in the Kenyan market will have to give the 30% stake to be considered as Kenyan companies in a push for a local stake as a requirement to obtain licenses in the country. Companies now have 3 years to comply with the local ownership regulations. The time frame is subject to a one-year extension by the ICT Cabinet Secretary upon request.

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

The regulation is part of a government effort to grow the ICT Sector in Kenya by encouraging equity participation among Kenyans.

Listed companies will conform to the 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 also requires that the government ICT procurement processes will give preference to local ICT companies in the award of tenders, including in sectors like security and defense. Further, where local businesses cannot fulfill tender requirements, foreign companies will have to transfer skills 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,” continues the Gazette Notice.

 

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