Listen to This Article Enhance your reading experience by listening to this article.

The government has removed the licensing requirement for foreign ICT companies wishing to invest in Kenya to have a 30 per cent local component.

ICT Cabinet Secretary Eliud Owalo said tenderpreneurs were exploiting the rule and “creating unnecessary roadblocks on the path of private investors.”

“Even though the rule, enacted through the 2020 ICT Policy to encourage indigenous firms to participate in the ICT sector through equity ownership, Kenyans have not been able to exploit this piece of legislation,” he said.

Owalo, who was giving the ICT ministry’s scorecard for the past year, said the legislation had not been useful as the tenderpreneurs were not eager to invest money in the ICT firms, preferring to be directors on paper, a condition that was scaring away foreign investors.

He said the only leeway these entities had was for them to apply to the Cabinet Secretary to grant them a waiver, discretionary power that had to be checked through legislation.

 “We cannot continue like that, ladies and gentlemen and I am saying that no single individual in the name of a cabinet secretary, starting with myself, should have that discretionary power to decide whether or not a foreign investment company is going to continue operating in Kenya,” Owalo said.

“We must anchor that in law and in this regard we have decided to waive that 30 per cent requirement. Foreign companies can now invest in the ICT sector without that clause. This has been approved by the cabinet and we are now progressing for gazettement”. 

He said the government had secured a $570 million Kenya Digital Economy Acceleration Programme facility (Sh80.8 billion) from the World Bank and an additional Sh5 billion from the Universal Service Fund to facilitate the ongoing ICT infrastructure and universal access connectivity projects. The projects will support the digital superhighway agenda and digitalisation of government services.

Virtual services

According to Owalo, the initiatives, which include virtual services, digital identity for all Kenyans and the provision of e-signature will enhance the efficiency and effectiveness of government services and enhance the level of efficiency and interaction between the members of the public and the government. 

Experts say while encouraging foreign investment and giving investors more ownership, can bring numerous benefits it is equally essential for Kenya to have appropriate regulations and policies in place to protect its national interests, ensure fair competition, and safeguard the welfare of its citizens.

Striking the right balance between attracting investments and safeguarding domestic interests is crucial for achieving sustainable and inclusive economic growth.