Startups Kenya - Afrikan Heroes

Mauritius, South Africa and Kenya Ranked As The Most Innovative Countries In Africa

September 4, 2020

According to the World Innovation Index developed by WIPO, Mauritius, South Africa and Kenya stood out in sub-Saharan Africa by their performance. The gap between rich and developing countries is widening, with 8 African countries in the bottom.

Mauritius ranks 1st in sub-Saharan Africa in the ranking of the global innovation index published on Wednesday, September 2, 2020 by the World Intellectual Property Organization (WIPO), in collaboration with Cornell University (United States ) and the European Institute of Business Administration (INSEAD). In the world, the Mauritian capital is the 9th economy in terms of the quality of institutions and the dynamism of the market.

A ranking of innovation results is established in 131 countries around the world, based on 80 indicators in several sectors, including business development, political environment, infrastructure, etc. This year’s publication is placed under the theme of funding, in view of the damage caused by the Coronavirus pandemic.

Mauritius, South Africa and Kenya respectively 52nd, 60th and 86th globally, lead in the sub-Saharan Africa region. Of the 25 economies identified as the best performing, 8 come from this region.

Among the other countries that stand out in the ranking, Tunisia (65th) and Botswana (89th) have higher spending in the education sector, while South Africa, Kenya and Egypt ( 96th) invest more in research and development. In terms of the domestic market, it is again South Africa which is positioned in 1st place in terms of market capitalization.

However, the gap between rich and developing countries is widening, especially in terms of financing innovation. Of the 10 worst performing countries in terms of innovation, 8 are African, including Zambia, Mali, Mozambique, Togo, Benin, Ethiopia, Niger and Guinea.

Globally, Switzerland, Sweden, the United States, the United Kingdom and the Netherlands lead the ranking.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Kenya ’s New ICT Law Cedes 30 Percent Ownership Of Foreign ICT Companies To Kenyans

August 12, 2020

Foreign companies in Kenya eyeing to do business in the country’s lucrative ICT sector will have to surrender 30 per cent shareholding to Kenyans. This is according to the National Information Communications and Technology Policy Guidelines 2020, published last week, that spell out new regulatory obligations by companies and individuals working in the ICT sector.

“The government strongly encourages Kenyans to participate in the ICT and science and technology sector through equity participation,” states the regulatory policy published last week by the ICT Ministry.
“It is the policy that only companies with at least 30 per cent substantive Kenyan ownership, either corporate or individual, will be licensed to provide ICT services.”

Here Is What You Need To Know

The move is likely to raise eyebrows among companies looking to make an entry into the country’s growing and lucrative ICT sector. It is also likely to increase compliance requirements for foreign firms bidding for long-term State tenders in the ICT sector.

“For purposes of this rule, companies without majority Kenyan ownership will not be considered Kenyan, and may thus not be calculated as part of the 30 per cent Kenyan ownership calculus,” the document reads in part.

In the recent past, dozens of companies have set up shop in Kenya, with the country appearing among the top three in Africa in terms of start-up investment.
According to investment platform Partech, which tracks equity deals in African start-ups, last year, Kenya recorded Sh5.6 billion worth of investments, emerging second in total funding and number of transactions in Africa.
The ICT policy further says foreign companies will be given three years to meet the local equity ownership threshold, and may apply to the CS for a one-year extension with appropriate acceptable justifications.

“For listed companies, the equity participation rules will conform to then extant rules of the Capital Markets Authority,” explains the policy.

The policy appears to respond to recent queries raised over the high number of tech start-ups locally with foreign boards of directors and management.
The policy, however, does not specify if the rules will apply to new foreign ICT companies making their entry into Kenya, or those already in existence.
Under the new regulations the government will also introduce a new licensing and registration regime where companies are given temporary licences that are later withdrawn if they fail to make commercial success.

“This will take the form of rules that allow companies to be licenced for certain services and only pay for the licence when they commence operations or achieve benchmark goals within predefined time frames,” explains the policy.

The State anticipates the policy will create 20 Kenyan multi-national ICT companies, 300 mid-sized firms, 5,000 small and medium enterprises and 20,000 startups.
This is expected to increase the number of startups through easing their barrier to entry. The policy also proposes a government venture capital fund that will invest in start-ups for a portion of the equity on a first-loss basis in case the startup fails.