Photograph — Bloomberg

Kenya’s President, William Ruto, has announced that the Startup Bill 2022, aimed at creating jobs for Kenyan youth and offering tax breaks to startups, will be officially signed into law by April 2024. “By March, or April next year, we will have a firm startup law in Kenya, which will assist many of our innovators de-risk their innovations and turn them into businesses,” said Ruto.

The startup bill, proposed by Nairobi Governor Johnson Sakaja in 2021, has been in the Senate. It had its initial reading in February 2023 and is now being discussed further in the Senate. It aims to help startups by giving tax breaks, making it easier to get loans, and providing a platform for resources and support. This bill is expected to create a legal structure that promotes the growth of technology in Kenya, attracting skilled individuals and investment capital.

The Startup Bill

As per the Startup Bill, a Kenyan startup is defined as a newly registered company or one that has been operating for a maximum of seven years since the Bill became law. For biotech startups, this period is extended to up to 10 years from their date of incorporation or registration. Moreover, the startup should have at least one-third of its ownership held by Kenyans and must have a headquarters or branch in the country.

Businesses already registered with the Business Registration Service (BRS) must also register with the Kenya National Innovation Agency (Agency) under the new law. The Agency is responsible for registering new businesses, creating a policy framework to support their growth, and connecting them with local and international business accelerators.

The Agency can help startups in their initial stage, protect their innovative ideas, offer financial and non-financial aid to startups in incubation programs, and contribute to the overall growth of startups.

The new law also creates a system to guarantee loans, making it easier for new businesses to start and grow by simplifying access to financial support. If put into action, this system is likely to increase the availability of financial help.

The Bill requires the Agency to manage the registration of startups and appoint a Startup Registrar. The Registrar’s job is to keep a record of registered startups, assess their financial needs, and identify what investment support they might need. This information will be helpful for venture capitalists and private equity funds looking for investment opportunities.

Kenya joins the list of African countries such as Tunisia, Senegal, Congo and Nigeria that have formulated startup acts to support the growth of their tech ecosystem. Other countries in the pipeline include Ghana, Ethiopia, Rwanda, and Uganda. The adoption of startup acts is fast becoming a trend among African countries. Consequently, lawmakers and regulators are adjusting to this new reality.

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