Kenya’s President, William Ruto, recently announced the removal of the foreign ownership rules as a condition for setting up shop in Nairobi, after successful lobbying by US tech giant, Amazon. This move has saved Airtel Kenya from being forced to sell a third of its stake to local investors, as it struggled to find Kenyan investors to buy a 30% stake.
The local ownership rule, which mandated telecoms companies to have at least 30% local ownership by 2024, has been a roadblock for big tech firms like Amazon looking to establish operations in Kenya, according to President Ruto. The policy, which President Ruto believes is detrimental to the economy by denying skilled youth opportunities for decent jobs, has been reviewed and dropped.
As the ownership rule is scrapped, the move is predicted to drive new investments into the telecoms sector, including the entry of global tech giants like Amazon, Google, and Microsoft. These companies have been steadily ramping up their investments in African countries in recent years, seeking to capitalize on expanding economies and rising internet access among the young population.
The recent policy shift in Kenya is set to favor Airtel Kenya, as the telecom company had been encountering challenges in locating local investors who would be willing to purchase a 30% stake. This had been attributed to a valuation mismatch between the company and potential local investors, who had evaluated its worth based on its continued losses. In light of this, the State had extended an open-ended waiver on the local ownership rule to Airtel. The new policy is therefore expected to significantly ease Airtel’s investment prospects in the country.
With the removal of the local ownership rule, Kenya is set to attract a significant number of foreign investors, including the tech giant, Amazon. Although Amazon has previously indicated its intention to roll out its services in South Africa and Nigeria, the policy shift in Kenya could see the country become a more attractive destination for the company’s operations. This presents a unique opportunity for Kenya to establish itself as one of the leading marketplaces for Amazon in Africa.
This policy shift comes at a time when global tech giants are using Kenya, South Africa, and Nigeria as their launch pads for a bigger stake in Africa. With the removal of the ownership rule, it is expected that more tech giants will invest in Kenya, leading to job creation and economic growth.