Kenya’s Startup Bill 2020 overview

Kenya recently gazetted “The Startup Bill, 2020”, sponsored by Nairobi County senator Johnson Sakaja, under the auspices of the Ministry of Education, Science and Technology, with most of the implementation assigned to the Kenya National Innovation Agency.

It is the third such startup-specific legislation in Africa after Tunisia and Senegal. A number of African countries including Ghana, Ivory Coast, Rwanda and the DR Congo are in the process of implementing similar startup legislation this year. The startup bill will have to go through the full legislative process i.e. public participation, debates in Kenya’s two houses i.e. the Senate and the National Assembly before it is assented by the president after when it will be effected as an act of parliament.

The aim of the bill is stated as ‘to provide a framework to encourage growth and sustainable technological development and new entrepreneurship employment; to create a more favorable environment for innovation; to attract Kenyan talents and capital; and for connected purposes’.

The initial draft bill which has a lot of reference to incubators, incubation policy frameworks and incubation programs is expected to generally benefit the startup ecosystem in Kenya.

The Bill says an entity certified as an incubator can be registered as a public limited company, a non-governmental organization, a private limited company, a limited liability partnership, or a partnership, but it must have as its principal object the “delivery of services to support establishment and development of innovative startups”. They must also have in place “facilities suitable to accommodate innovative startups”, and “adequate equipment for startup activities and innovation”, whatever they may be, and be administered by persons of “recognized competence on business and innovation”.

In addition to an incubation framework the bill aims to create a database of startups, link startups with financial and research institutions, facilitate fiscal and non-fiscal support to startups, facilitate protection of IP innovations by startups in Kenya.

For startups to benefit from the Act, it has to be a registered company based in Kenya, a partnership firm, a limited liability partnership, or a “non-governmental organization”. It must be majority owned by one or more citizens of Kenya.

Furthermore, the Bill stated the National and county governments shall promote innovation, facilitate the transfer of technology innovation, and create and develop a sustainable, globally competitive technology innovation sector that contributes towards the accelerated growth of the economy. This is good news for tech start ups as they will have a wider array of resources allocated to their benefit.

The Kenyan startup ecosystem is robust, with entrepreneurs building solutions for their communities that they want to scale across the globe. The Startup Bill is a positive step towards recognizing its role in the country’s socio-economic development through the creation of a regulatory framework.

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