Kenya’s Start-up bill | What is it trying to achieve?

Kenya’s start-up bill was published on 14^th September 2020 through The Kenya Gazette supplement No 163 (Senate Bill No.16) and is set to be debated in both Senate and national assembly before becoming law.

The Impact of innovation linked to Start-ups in Kenya has been felt socio economically both locally and globally with the most successful and recognized innovation being Mpesa with is present apart from Kenya in Nine other countries namely Albania, the Democratic Republic of Congo, Egypt, Ghana, India, Lesotho, Mozambique, Romania and Tanzania.

Mpesa has contributed to financial inclusion in Kenya with an estimated 70 per cent of the adult Kenyan population uses M-Pesa compared to 31 percent using banks, further according to studies done by economists from MIT and Georgetown University, M-Pesa has lifted 194,000 Kenyan households – or 2 percent of Kenyan households out of extreme poverty.

Other notable start-ups in Kenya that have had an impact in various industries are; Cellulant, Twiga Foods and M-Kopa who also were among start-ups that took a lion’s share (17 percent) of funding to Africa in 2019 only second to Nigeria.

The start-up bill seeks to significantly harness the potential of start-ups for socio economic development of Kenya through establishment of a conducive policy framework that enables start-ups to thrive.

Although the bill is much more comprehensive, I will only focus on thematic areas of; mainstreaming start-ups, encouraging stakeholder collaboration and start-up incentives

The start-up bill seeks to mainstream and decentralize innovation through start-ups at both national and county levels of government through establishment of conducive policy environment, allocation of resource through budgetary allocation as well as fiscal support

The start-up bill provides foundational framework for achieving attractor state or ideal entrepreneurship and innovation environment through adoption of the triple helix model that emphasizes active collaboration between government, academia and private sector.

For instance, at county level of government; counties can establish a start-up incubator and either physically run it within county owned office space or collaborate with independent incubators located in the county to run such a program. Similarly, the county government can rope in institutions of higher learning within the county for research support to start-ups as well as other private sector players who may provide markets to start-ups through commercial contracts or seed funding to start-ups. Similarly, counties will be required to allocate start-up activities in their budget.

The start-up bill seeks to address major challenges faced by start-ups that hinder their growth. The challenges majorly faced by start-ups are; access to various forms of finance, access to market and market intelligence, intellectual property filing, taxes, office space, research, business registration and closure among others.

Though the comprehensive conversation to address these challenges are ongoing through public participation, the bill currently has made attempts to address them as follows; access to finance shall be approached from a point of derisking start-ups through establishment of a framework that puts into play start-up funding players such as business angels, venture capitalist, private equity players as well as public through the capital markets authority. The details of how the framework will work is something that the stakeholders must urgently address. Similarly, a special registrar will be appointed to set up and maintain a national start-up database which will act a good reference point for investors to query and invest in start-ups

The bill tasks the Kenya National Innovation Agency (KENIA) with the task of developing an improved mechanism that will enable start-ups efficiently and effectively file for their Intellectual property.

Further the bill espouses to provide various incentives for start-ups such as tax breaks on corporate tax, VAT, special capital deductions that are unique to start-ups, hyper depreciation for start-up centric hardware’s are some examples although further consultations and negotiations are needed to finalize on a workable list of incentives.

Provision for rapid and cost-effective business registration and closure is also being considered given the unique nature of start-ups who work in a very uncertain environment as well as provide room for experimentation without being penalized for it.

The start-up bill if well implemented is going to change Kenya’s entrepreneurship topography for the better and all hands must be on deck to participate in its success.