The Cabinet has approved the review of the minimum threshold for local shareholding for entities in the Information, Communication, and Technology (ICT) sector in a significant move aimed at enhancing the ease of doing business and promoting foreign investments in the technology sector.

This policy shift is designed to encourage technology and knowledge transfer while fostering the expansion of the digital economy, strategically positioning the country for increased foreign investments in technology as part of the Administration’s Bottom-Up Economic Transformation Agenda (BETA).

Evaluating shareholders

“As part of the ongoing efforts to streamline the governance framework for foreign investments, this reform seeks to fortify legislative consistency, creating a conducive environment for both local and international businesses to thrive,” said the Cabinet in a brief.

By reevaluating the minimum local shareholding requirements, the government aims to strike a balance between supporting domestic investors and attracting foreign capital, fostering a more dynamic and competitive business landscape.

Kenya had raised the minimum local shareholding for ICT firms in 2021 from 20 per cent to 30 per cent in an attempt to encourage more domestic ownership and participation in the rapidly growing sector.

The new review indicates a shift towards a more flexible approach, acknowledging the potential benefits of increased foreign investments in driving technology adoption, innovation, and economic growth.

By allowing greater foreign ownership in ICT companies, the government hopes to attract more investors tech giants and international investors who can bring in expertise, capital, and cutting-edge technologies.

This, in turn, is expected to spur innovation, create employment opportunities, and boost the overall competitiveness of the digital economy.

As the world becomes increasingly interconnected and reliant on technology, the government recognizes the need to embrace foreign investments as a means to stay at the forefront of the digital revolution.

By attracting foreign investments in technology, the country aims to expand access to digital services, bridge the digital divide, and empower businesses and individuals to participate in the digital economy fully.