The Kenyan government is taking significant strides to bolster its startup ecosystem with the introduction of the Startup Bill 2022.

According to MWC Legal, the bill, currently at the Second Reading stage in the Senate after its first reading on February 15, 2023, aims to provide a comprehensive legal framework to nurture and encourage sustainable technological development, innovation, and the growth of startups in the country.

“Aligned with the Constitution of Kenya, 2010, which recognizes the importance of science, indigenous technologies, and intellectual property in national development, the Startup Bill, 2022 places National and County Governments at the forefront of fostering innovation and technology transfer. The bill’s objectives include facilitating technology transfer, boosting employment and wealth creation, and strengthening ties between research institutions and the business community,” the legal firm noted.

The objective of this Act is to create a comprehensive framework aimed at nurturing a culture of innovation and entrepreneurship in Kenya.

The Act seeks to achieve this through several key provisions. Firstly, it aims to encourage innovative thinking and entrepreneurship by establishing a supportive environment for startups.

Secondly, it intends to facilitate the registration of startups and their connection with financial institutions, private sector research entities, and various institutions at both the national and county levels of government.

This connection is intended to provide startups with access to necessary resources and support networks. Additionally, the Act aims to foster investments in startups and provide both fiscal and non-fiscal forms of assistance to aid their growth.

It also seeks to establish a conducive environment for the establishment, growth, and regulation of startups, while also setting up incubation facilities at both national and county levels to further encourage their development. Lastly, the Act emphasizes the importance of monitoring.

During the Innovate Nairobi TechWeek organized by the County government and took place last week from August 7th to 11th, Governor Johnston Sakaja noted that he will be in the lead to push for the bill to be passed.

“Let us be in the business of building the digital economy. We have already sent a draft of the bill to President William Ruto. I am hopeful that leaders will see the importance of this bill and push towards it being a gazette. We involved firms like Twiga, Cellulant, and Sendy among others in the process.,” The governor stated at the fair that attracted more than 1,000 online registration of attendees and had myriads of exhibitions steering innovations.

He added, “We are working towards streamlining entry for foreign entities. We are embarrassed that some companies are not registered in the country. We will ensure that the government lowers tax imposed on startups.”

Key provisions of the Startup Bill 2022 include:

Startup Friendly regulations: The bill aims to streamline bureaucratic processes for startups, making it easier for entrepreneurs to register and operate their businesses. It includes provisions for expedited business registration, simplified taxation procedures and reduced regulatory hurdles.

The bill outlines specific criteria for startup registration, including being newly registered or in existence for no more than three years (or five years in the biotechnology sector), having innovation as their main objective, and being wholly owned by Kenyan citizens, among other requirements.

Access to Funding: Recognizing the importance of funding for startups, the bill outlines mechanisms to facilitate access to capital. This includes setting up a dedicated fund to invest in early-stage startups, providing tax incentives for angel investors and venture capital firms, and encouraging corporate partnerships with startups.

The Startup Bill, 2022 also addresses incentives for registered startups and incubators. The government is set to provide non-fiscal and fiscal support, including tax incentives, to stimulate the growth of startups. The bill also outlines plans for a Credit Guarantee Scheme to provide financial support and risk management to startups, further fueling their growth.

Innovation Hubs and Incubators: The bill emphasizes the creation of innovation hubs and incubators across the country, aimed at providing startups with physical spaces to collaborate, access mentorship and gain essential resources to grow their businesses.

Incubators, defined as entities supporting the birth and development of startups, are also central to the bill’s provisions. To be certified as an incubator, entities must demonstrate their commitment to supporting innovative startups, maintain suitable facilities and equipment, and have established collaborative relationships with universities, research centres, public institutions and financial partners involved in innovative activities.

Intellectual Property Protection: The bill introduces measures to safeguard intellectual property rights, encouraging innovation by assuring entrepreneurs that their ideas and inventions will be protected.

Education and Skills Development: Recognizing the need for a skilled workforce to support startup growth, the bill encourages the integration of entrepreneurial education and training in schools and universities, ensuring a pipeline of talent for the startup ecosystem.

International Collaboration: The Startup Bill 2022 emphasizes fostering international collaboration, encouraging partnerships between Kenyan startups and global technology hubs. This includes provisions for startup exchange programs, cross-border investments, and participation in international innovation events.

In addition, the Kenya National Innovation Agency, established under the Science Technology and Innovation Act, will play a crucial role in assisting startups with various aspects, from registration to intellectual property rights protection at an international level.

As Kenya continues to solidify its reputation as the “Silicon Savannah,” the Startup Bill, 2022 reflects the government’s proactive approach to fostering innovation and supporting startups.

By establishing an enabling regulatory environment and promoting collaboration between startups, incubators, and research institutions, the bill aims to propel Kenya’s startup ecosystem to new heights of success and recognition on the global stage.

The progress of the bill through the legislative process is being keenly watched, as it holds the potential to shape the future of innovation and entrepreneurship in the country.