The Startup Bill, 2020 was proposed by the Senate on 14 September 2020 through Kenya Gazette Supplement No. 163 (Senate Bill No.16). The Bill is awaiting debate by the Senate and the National Assembly before enactment.
WHAT IT IS
The drafting of the Startup Bill establishes a law to recognize and support startups in Kenya so as to foster a culture of innovative thinking and entrepreneurship.
The intentions of the Bill are clearly stated under the objectives in Section 3 of the Bill, which are to:
- Allow for the registration of startups;
- Enable the linkage of startups with private investors, financial institutions, the private sector, research institutions and such other institutions at the county, national and international level;
- Facilitate investments in startups;
- Facilitate the provision of fiscal and non-fiscal support to startups in Kenya;
- Promote an enabling environment for the establishment, development, conduct of business and regulation of startups;
- Establish incubation facilities at the National and County levels of government;
- Establish an environment that promotes the establishment of startups; and
- Monitor and evaluate the legal and regulatory framework to encourage the development of startups.
THE SALIENT FEATURES OF THE BILL
A startup incubator is defined under Clause 2 of the proposed Bill to mean a company, partnership, non-governmental organization or limited liability partnership, whose principal object is the support of the birth and development of start-ups, innovation, and related activities related to the transfer technological and research, development and innovation processes, through the offer of dedicated physical spaces and services advice.
If passed, the Bill proposes to create through the establishment of the the Kenya National Innovation Agency (the Agency), partnerships among local and international business incubators; create online directories of start-ups and incubators; and register and certify start-ups and incubators. County governments will also be able to establish their own incubation programmes.
Under the Bill, the Agency will subsidise the formation of start-ups, facilitate the protection of intellectual property innovations by Kenyan start-ups, provide support to enable the growth and development of registered start-ups and put in place measures for the granting of fiscal incentives, including tax incentives.
The Bill further allows for the establishment of a Credit Guarantee Scheme intended to provide accessible financial support and act as a guarantee for investors in start-ups.
OBSERVATIONS AND THOUGHTS
The Startup Bill, if passed, is expected to bring order to the fast-growing startup sector in Kenya by affording protection to innovators and investors from fraudulent dealings, and intellectual property infringement, and its enactment will introduce a legislative framework that will underpin the growth of a flourishing and innovative start-up sector in Kenya.
It is our observation, however, that the enactment of the Startup Bill may introduce several cumbersome bureaucratic processes and procedures for new startups that will hamper the growth of the innovations startup industry in the country.
We shall continue to keenly following up on the enactment process of the Bill and shall keep you updated.
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