Overview of Kenya’s New Startup Bill by Richie Santosdiaz for The FinTech Times
Fintech Middle East & Africa Regtech

Overview of Kenya’s New Startup Bill

Kenya, in particular its commercial and financial hub of Nairobi, is a major player generally from an economic point of view not just in East Africa but the African continent as a whole.

Dubbed as “Silicon Savannah,” Nairobi has a strong fintech and wider tech and financial services ecosystem.

As reported by The FinTech Times in September, The Kenyan parliament has published a Startup Bill, whereby the Kenyan government is aiming to develop a number of incentives for startups. This is in addition to having a protection for intellectual property among several interesting provisions. The Startup Bill 2020 provides a framework for the development of innovative entrepreneurship, establishing incubation hubs, and building a network of global and regional investors.

At present, as what the bill highlights, Kenya has some significant successes in the fintech and wider tech space. The examples highlighted in the bill included, first, Cellulant. They have developed a digital payment platform that offers flexible payment options for consumers and businesses, and works with financial institutions, governments, and mobile network operators to increase transparency and expand their reach in Africa.

Second, Sendy is a logistics platform that provides drivers to fulfil customers’ logistics needs from motorcycle deliveries to trucks; they started operating in Kenya before Uber entered.

Third, Twiga foods sources quality produce from thousands of farmers around Kenya, providing them with a ready guaranteed market; this is done with their mobile-based supply platform.

Fourth, M-Kopa provides “pay-as-you-go” energy services for offgrid customers across emerging markets; this is done with their patented technology platform that combines embedded GSM + mobile payments. The company had already connected 600,000 homes across Africa, providing 75 million hours of kerosene-free lighting each month.

The bill highlights that in the African continent, Tunisia and Senegal have noticed the potential of startups in their countries to support rapid social-economic development, which has resulted in them enacting their own laws to recognise, support and regulate start-ups activities. The Kenyan Startup Bill 2020 then justifies its own rationale.

The new Startup Bill “therefore seeks to provide a legislative framework —

  • That fosters a culture of innovative thinking and entrepreneurship
  • For the registration of startups and the linkage of such startups with financial institutions, the private sector research institutions and such other institutions at the National and county level of government
  • To facilitate investment in and the provision of fiscal and nonfiscal support to startups in Kenya
  • That promotes an enabling environment for the establishment, development, conduct of business and regulation of startups
  • For the establishment of incubation facilities at the National and county levels of government and environment that promotes the establishment of startups and
  • For the monitoring and evaluation of the legal and regulatory framework and the mechanisms put in place to encourage the development of startups.

The bill further elaborates and says, “Establishment of Incubation Programmes and provides for matters related to the role of the National and County Governments. The Bill provides for role of National and county government in relation to startups to include, among others, to—

  • Promote innovation
  • Facilitate the transfer of technology innovation
  • Create and develop a sustainable, globally competitive small and medium enterprise sector that Contributes towards the accelerated growth of the economy
  • Promote the creation of employment and wealth creation and
  • Promote the linkages between universities and research institutions and the business community.

The Bill mandates the national and county governments put in place a national and county incubation policy framework for the development of the business incubation sector and startup system.

The Bill mandates the Kenya National Innovation Agency established under the Science, Technology and Innovation Act, 2013 and county executive committee members responsible for matters relating to science, technology and innovation to establish incubation programmes and regulations on relationship between incubators and startups.”

The bill was published last month in the Kenya Gazette. The full bill can be viewed here.

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