New Start-up Bill seeks to spur entrepreneurship in Kenya

Kenya, known as one of the leading hubs for start-ups in Africa, is poised for a transformation in its start-up landscape with the introduction of the new Start-Up Bill 2021. In a recent interview on CNBC Africa, George Bodo, CEO of Coastridge Research, shed light on the implications of this bill for the start-up sector in Kenya. The bill, aimed at providing an institutional framework for start-ups, addresses the lack of government involvement in the sector. It creates two key institutions - start-up incubation programs administered by both county and national governments, and the Kenya National Innovation Agency tasked with coordination functions among various government institutions. Key Points: 1. Institutional Framework for Start-ups: The newly introduced Start-Up Bill 2021 focuses on providing a much-needed institutional framework for start-ups in Kenya. By setting up start-up incubation programs and the Kenya National Innovation Agency, the bill aims to streamline processes such as registration of start-ups, admission to incubation programs, and certification of intellectual property. 2. Addressing Funding Challenges: While the bill does not fully address funding challenges faced by start-ups, George Bodo highlights the need for alternative investment opportunities for pension funds and other long-term investors. By categorizing contributors based on age and risk capital, there is potential to channel funds into the start-up ecosystem, currently dominated by investments in government securities. 3. Local Ownership Rule: One area of contention in the bill is the requirement for one-third local ownership in start-up companies. While some may view this as a gray area, George Bodo argues that promoting local content is a common strategy employed by governments globally. The rule also serves the purpose of ensuring tax compliance through the presence of a local director in start-up companies. In addition to providing a government input into the start-up culture, the Start-Up Bill 2021 aims to simplify procedures such as registration of intellectual property, a common challenge faced by start-ups. While funding remains a structural issue that needs further attention, the bill sets a precedent for enhancing the start-up ecosystem in Kenya. By fostering collaboration between the public and private sectors, and encouraging alternative investments, the bill lays the groundwork for a more vibrant and supportive start-up environment. Quote: George Bodo emphasizes the need for education and sensitization around investing in start-ups, especially targeting pension funds and long-term investors. By leveraging age and risk capital profiling of contributors, there is an opportunity to unlock significant funding for the start-up sector, currently underutilized in government securities. Through targeted initiatives and persuasive strategies, there is potential to expand the funding landscape for start-ups in Kenya.