Three-year compliance deadline set for Kenya’s local ownership laws

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JOE Mucheru, Kenya’s ICT Cabinet Secretary has given the country’s foreign owned firms a deadline of March 2024 to ensure 30 percent local ownership.

The 30 percent figures means that, in addition to the deadline, Mucheru increased the previous 20 percent cap, implemented in 2008, by half.

Local reports have stated that the rules, introduced for the telecoms sector, will see Airtel Kenya forced to sell part of the company in order to comply.

Announced on April 9 through a notice in the Kenya Gazette, local telcos have until March 2024 to meet the new requirements.

The scanned notice read: ‘The government encourages Kenyans to participate in the ICT sector thought equity participation. It is the policy that only companies with at least 30 percent substantive Kenyan ownership, either corporate or individual, will be licensed to provide ICT services.’

However, existing licensees ‘may apply to the Cabinet Secretary for extension or exemption under this guideline’ and ‘for a listed company, the equity participation rules will conform to the extant rules of the Capital Markets Authority.’

The document continued to state that ‘An existing licensee with less than 20 percent local equity ownership and has not exhausted its three years grace period will be required to meet the 30 percent local equity ownership at the end of its grace period.’

Further it clarified: licensees that previously met the 20 percent threshold now have two years to meet the next threshold; a new licence applicants will have three years to meet the local equity ownership threshold from April 9 2021; and a company registered to exclusively offer Business Process Outsourcing (BPO) Services will be exempt from this rule.

The requirements aren’t new. The 30 percent share was first introduced in Kenya’s 2006 ICT Policy but was revised down to 20 percent the following year. Then in August last year, the National ICT Policy Guidelines 2020 were published specifying that firms must have ‘at least 30 percent substantive Kenyan ownership.’

Airtel Kenya was granted an exemption to the rules in 2013, but the latest notice stated it must comply within three years.

 

 

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