By Beverly Tracy

OVERVIEW OF THE STARTUP BILL, 2022: FOSTERING INNOVATION AND ENTREPRENEURSHIP IN KENYA

The Startup Bill, proposed in 2022, aims to create a conducive environment for innovation, promote entrepreneurial thinking, and attract Kenyan talent and capital for technological development. The Bill intends to achieve these objectives through various provisions and incentives for startups and incubators.

The main purpose of the Bill is to:

  1. Foster a culture of innovative thinking and entrepreneurship.
  2. Establish a framework for registering startups and connecting them with financial institutions, private sector research institutions, and government agencies.
  3. Facilitate investments and provide support to startups in Kenya.
  4. Promote an enabling environment for the establishment, development, and regulation of startups.
  5. Establish incubation facilities at the national and county levels to support startup growth.
  6. Monitor and evaluate the legal and regulatory framework for encouraging startup development.

KEY HIGHLIGHTS OF THE BILL

1. Mandate for Government Support: Both the national and county governments are mandated to promote innovation, facilitate technology transfer, and develop a sustainable and globally competitive technology innovation sector to boost the economy.

2. Kenya National Innovation Agency

    The Bill proposes that the Kenya National Innovation Agency, in collaboration with county executive committee members, will be responsible for implementing various provisions of the Act. The roles of the Agency include:

    • Establishing a policy framework for business incubation and startups.
      • Developing programs for certifying and admitting incubators.
      • Creating platforms for accessing information related to startups and incubation programs.
      • support any research and development activities undertaken by startups
      • 3. Registration of Startups and Incubation Admission

    The Bill proposes that to be eligible for registration and admission into an incubation program, startups must meet specific criteria such as: being registered in Kenya, having been in existence for a limited period, are focused on innovation, and are wholly owned by Kenyan citizens.

    Entities which were formed as a result of merger or reconstruction of an existing business or subsidiaries of existing entities which are not registered as startups are expressly excluded from registration.

    Application Process for admission into Incubation

    The Bill proposes that startups that qualify the eligibility criteria may apply for admission into an incubation program by submitting an online application alongside attaching their certificate of registration, a letter of recommendation with other supporting documents. The Registrar shall examine the application within thirty days and, if approved, will issue a certificate of registration and admission.

    The registrar may however reject an application for the admission where an entity has submitted false or misleading information in its application or the objects of the entity are likely to be pursued for an unlawful purpose or for a purpose incompatible with public interest.

    • Deregistration: Startups may be deregistered if they are found to be pursuing unlawful activities or acting against public interest. Before deregistration, the startup will be issued a compliance notice and given the opportunity to rectify the non-compliance.
    • Certification of Incubators:

    The Bill outlines eligibility criteria for entities seeking certification as incubators, which includes having adequate facilities, experienced personnel, and a track record of supporting innovative startups. An entity that qualifies for Certification may apply for admission as an incubator to the registrar stating a brief description of its projects, its expenditure on research and development; a list of shareholders; educational qualifications and professional experiences of members and staff, last financial statements filed; and a list of industrial property rights and intellectual property rights owing.

    • Obligations of Incubators: Incubators are expected to support technological entrepreneurs at the earliest stage of their ventures, provide administrative services, help raise capital, and create investment opportunities for startups.
    • Incentives for Startups: The Bill proposes measures to incentivize startups, including facilitating protection of intellectual property, providing fiscal and non-fiscal support for incubated startups, and assisting with research and development activities.

    CONCLUSION

    The Startup Bill, 2022, aims to promote innovation and entrepreneurship in Kenya by establishing a supportive framework for startups and incubators. By providing incentives, facilitating technology transfer, and fostering a culture of innovative thinking, the Bill aims to accelerate the growth of the technology innovation sector and contribute to the overall development of the Kenyan economy.

    For startups that need support or more information, contact fshako@mitullahshakolaw.com