Kenya's startup bill set to become law by April 2024
President Williams Ruto has announced that the Kenyan Startup Bill will be signed into law in April 2024. Here are a few things you need to know about the legislation.
The extensive two-year process of formulating Kenya's pro-startup legislation is reaching its conclusion. President Williams Ruto disclosed on Tuesday, during the Kenya Innovation Week, that the Kenya Startup Bill will be signed into law by April next year.
“By March, or April next year, we will have a startup law in Kenya, which will assist many of our innovators de-risk their innovations and turn them into businesses,” he disclosed.
Recall that in December 2021, Senator Johnson Sakaja presented the Kenya Startup Bill in the Senate, where it received unanimous support with 34 approvals and no objections. It is currently awaiting concurrence from the national assembly before being submitted for the assent of President Ruto.
The Startup Bill aims to offer tax incentives, facilitate credit access, and create a platform for startups to access resources and support. Anticipated to establish a legal framework fostering tech growth, the bill will also attract talent and capital to Kenya.
According to a statement by the Fintech Association of Kenya: “The signing of the Startup Bill into law [will be a] significant milestone for Kenya's startup ecosystem. The bill is expected to create a more enabling environment for startups to flourish, contributing to Kenya's economic transformation.”
In September, President Ruto was in Silicon Valley to pitch his country as “Africa’s business process outsourcing and creative economy hub”. “Kenya is a full package investment destination; economically stable, entrepreneurial, secure, innovative with a favourable tax environment, skilled labour force, technological expertise, green energy credentials and a gateway for six undersea fibre-optic cables providing reliable data connectivity,” he told investors during the trip.
This legislation will further stamp the country's preparedness to drive its economy through innovation.
What you should know about the Kenyan Startup Bill
According to the provisions of the Startup Bill, a Kenyan startup is characterised as a recently registered company or one in operation for a maximum of seven years from the enactment of the Bill. In the case of biotech startups, this period extends to up to 10 years from the date of incorporation or registration.
Additionally, the startup must have at least one-third of its ownership held by Kenyans and maintain a headquarters or branch in the country.
The legislation also mandates businesses already registered with the Business Registration Service (BRS) to undergo registration with the Kenya National Innovation Agency (Agency). The Agency is tasked with registering new businesses and formulating an incubation policy framework to foster their growth. Additionally, the Agency will facilitate connections between local and international business accelerators.
Empowered by the Bill, the Agency is authorised to support startups in their initial stages, safeguard the intellectual property of their innovations, provide financial and non-financial assistance to startups admitted into incubation programs, and contribute to the overall growth of startups.
The legislation also establishes a loan guarantee mechanism aimed at facilitating the launch and expansion of new businesses, streamlining access to financial aid. If implemented, this mechanism is expected to enhance the availability of financial assistance.
Under the provisions of the Bill, the Agency is mandated to oversee startup registration and appoint a Startup Registrar. The Registrar is entrusted with maintaining a database of registered startups, conducting assessments of their financial needs, and identifying investment assistance requirements. This information will be invaluable to venture capitalists and private equity funds seeking opportunities for investment.
