New bill to anchor local startups growth, regulation

Nairobi Senator Johnson Sakaja has developed the Startup Bill, 2020 which seeks to provide a framework to encourage growth and sustainable technology development.

The bill which seeks to anchor startups in the Kenyan law for the very first time requires both the National and County governments to develop incubation hubs in a means to establish a favourable innovation environment by attracting both talents and capital.

Further, the bill proposes the creation of the Office of the Registrar of Start-ups which will maintain a database covering the ownership of start-ups, products and services offered, the financial needs of entities and target markets.

Startups registered in the incubation programmes will be required to be officially registered as companies, partnerships or non-government organisations and must have a scalable business model.

Additionally, the entities must be majority owned by Kenyans while deploying atleast 15 per cent of their expenses to research and development.

The incubators meanwhile shall act as industry intermediaries by raising capital for the startups through building linkages with the private sector and technologies transfers.

Moreover, the incubators shall support non-fiscal incentives including the protections of innovations via intellectual property (IP) registrations, training and capacity building.

The bill aligns to the government goal of leveraging technologies as a solution to widespread unemployment especially among the youth.

Unlike, small and medium enterprises (SMEs) the support for startups presents a new host of challenges due to their uniqueness.

“SMEs are clones of existing businesses while start-ups solve new problems via technology and innovation hence requiring unique support,” noted Victor Agolla, the Managing Director to MSME consultancy Viffa Consult and a proponent of the bill.

In spite of the lack of regulation for start-ups, Kenya already hosts elaborate businesses from the ICT sub-sector including Cellulant, Sendy, Twiga Foods and M-Kopa Solar and has earned the term ‘Silicon Savannah’ for its ability to produce scalable tech-based businesses.

Startups posses the ability to produce better jobs by volume and quality unlike SMEs. For instance while Sendy and TwigaFoods are fairly young, the two companies are estimated to support 20,000 jobs in their value chain.