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Foreign tech companies now required to relinquish 30 percent stake to operate in Kenya

Much like other countries such as India that require foreign companies to first relinquish a percentage of ownership to locals before setting up shop in the country, Kenya has published guidelines requiring overseas ICT companies to give-up 30 percent of ownership to Kenyans to operate in the country. This comes after the National Information Communication and Technology Public Policy published Guidelines of 2020.

This effectively mean that overseas tech companies will have to give-up a 30 percent stake in ownership to Kenyans before being allowed to set shop in the country. Current companies will have up to three years to comply with the new regulations subject to a one-year extension by the ICT cabinet secretary upon request.

In a gazette notice issued by the concerned Kenyan regulatory body, 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.

The latest move is regarded as one of the countries push to grow the ICT sector by encouraging equal participation by Kenyans. The new guidelines will also expect the government ICT procurement processes to give preference to local ICT companies in the award of tenders, including in sectors like security and defense. Additionally, in case no local businesses cannot fulfill tender requirements, foreign companies will have to transfer skills to local firms.

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