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Amazon Successfully Lobbies Kenyan Government to Drop 30% Ownership Rule

AWS Zone Cloud Infrastructure in Kenya.

The Kenyan government has dropped a policy requiring foreign-owned firms to sell at least 30% of their stakes to local investors after US-based tech giant Amazon successfully lobbied President William Ruto to remove the foreign ownership rule. This is being reported by the Business Daily. Airtel Kenya will be the biggest beneficiary of this policy shift since it had started looking for Kenyan investors to buy the required 30% stake. The policy change is expected to attract more foreign investors in the country’s expanding IT sector, which has been growing rapidly and is attracting the interest of many foreign companies.

In April 2021, the Kenyan government introduced a rule that required telecoms companies to ensure local ownership of at least 30%, a threshold that was increased from the initial 20% set in 2008. However, the recent policy shift by President Ruto has done away with this rule, which was meant to trigger deal-making in the country’s rapidly expanding information and telecoms sector. President Ruto reckoned that the rule had become a hurdle for large tech firms like Amazon, denying the growing number of skilled youth decent job opportunities.

The President announced this policy shift on Thursday during a regional business summit for US investors in Nairobi, stating that the position was untenable and that the local ownership quota would be scrapped to facilitate greater investment in the ICT sector. He added that the data protection law was aligned to support robust growth in data storage. President Ruto, who took power last September, did not disclose the timeline for the review of the policy.

Dr Ruto said he was convinced to review the more-than-a-decade-long policy after Amazon Web Services, a unit of the US e-commerce giant that provides cloud computing platforms to individuals, companies, and governments, committed to investing in Kenya on the condition that the local ownership quota is scrapped. He revealed that he was persuaded by a good gentleman from Amazon Web Services that it was impossible for Amazon to cede 30% equity to any entity they didn’t have any business relationship with. As a result, they were holding their investment in the country.

“I was persuaded by a good gentleman from Amazon Web Services that it was impossible for Amazon to cede 30 percent equity to any entity they didn’t have any business relationship with. And as a result, they were holding their investment in our country,” said Dr Ruto.

President Ruto expects Amazon to lead the way and other global tech giants to follow suit and set up operations in Kenya. He said, “I hope that Amazon, now that I have kept my part of the bargain, you keep yours. But it is not just about Amazon, it is all about other ICT companies that want to invest in our country.”

The relaxation of the foreign ownership rules is expected to attract more global tech giants such as Microsoft, Amazon, and Google to invest in the country, using Kenya, South Africa, and Nigeria as their launch pads for a bigger stake in Africa. The move could also see Kenya become one of the first marketplaces in Africa for Amazon, which is reportedly looking to expand to the continent this year.

Read: Amazon Set to Launch a New AWS Local Zone Cloud Infrastructure in Kenya

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Editor at TechArena. I cover all things technology and review new gadgets as I get them. You can reach me on email: kaluka@techarena.co.ke
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