The African tech ecosystem has grown exponentially, with many governments and private organizations making efforts to support its development. Policy plays a crucial role in shaping the ecosystem, as it can create an enabling environment for tech entrepreneurs to thrive, attract investment, and promote innovation. Little wonder several tech-vibrant countries on the continent are embracing national startup acts to support innovation.
In Africa, the subject of policies and technology is a bit technical. More often than not, players in the industry have argued that innovation precedes policies and regulations on the continent. This means innovative solutions come up on the continent without clear regulatory frameworks or policies.
Clear and predictable regulatory frameworks can provide entrepreneurs with a level of certainty and confidence and also help attract investment and partnerships. For example, in some African countries, policies that promote local content development and technology transfer have helped to spur innovation and create new opportunities for entrepreneurs. Unfavourable policies have also created uncertainties and risks for both entrepreneurs and users,
In 2020, a tech policy in Kenya which sought to position it for global opportunities and gain global recognition for innovation, efficiency, and quality in public service delivery was created. The “National Information, Communications and Technology (ICT) Policy” is aimed at developing the nation’s digital economy and helping grant universal access to ICT infrastructure and services in the country. The policy states that only companies with at least 30% substantive Kenyan ownership, either corporate or individual, should be licensed to provide ICT services. As an added advantage, the policy would encourage more Kenyans to participate in the country’s ICT sector through equity participation.
Tech companies like Airtel operating in the country were given three years to meet the local equity ownership and possibly a one-year extension if there are valid reasons to exceed the set date.
But now, this rule has been reversed by President William Ruto at a regional business summit in Nairobi targeted at US investors. Why? The reason for this is not far-fetched. While the policy is beneficial to the citizens because of its inclusive nature, it likely stands as a hurdle for investors. For many investors, relinquishing 30% ownership to Kenyan citizens could be a burdensome deal to embark on. This outrightly poses a challenge for the country’s tech ecosystem because the lion’s share of tech funding on the continent at large is gotten from foreign investors.
The reversal of the policy would doubtlessly reinforce the growth of the country’s tech ecosystem in the coming years. Reportedly, e-commerce giant Amazon convinced the Kenyan government to abandon the foreign ownership rules in order for the tech giant to establish a presence in Nairobi.