Kenya’s Local Ownership Rule for ICT Licensees: From 30% to Nothing

The local shareholding requirement for ICT licensees in Kenya stood at 30% under the 2020 policy guidelines, and it was removed in August 2023 by gazette notice rather than an act of Parliament. How it was removed says something about how much weight to put on Kenyan sector policy generally.

A Policy Requirement, Not a Statutory One

The local shareholding requirement never appeared in the Kenya Information and Communications Act itself. Section 5C of the Act lets the Cabinet Secretary issue policy guidelines of a general nature relating to its provisions, in writing and published in the Gazette, and section 5(4)(a) requires the Communications Authority, in performing its functions, to have regard to guidelines notified to it and published in the Gazette. The 30% requirement lived inside guidance of that kind, the National Information, Communications and Technology (ICT) Policy Guidelines, 2020, not inside the statute. That distinction is what made the requirement removable by another gazette notice from the same Cabinet Secretary, rather than requiring Parliament to amend the Act. A rule that arrives by policy guideline can leave the same way. Because section 5C(2) requires guidelines to be published in the Gazette, the Gazette is also where any further change will appear.

Licensing itself is statutory. Under section 24(1), no person may operate a telecommunication system or provide telecommunication services except under a valid licence granted under the Act, and section 25 allows the Communications Authority to grant licences subject to such conditions as it may deem necessary. Policy guidelines inform how the Authority exercises that function, but the conditions you must meet are those attached to your licence.

The 2020 Local Shareholding Requirement

The Ministry of Information, Communications and the Digital Economy has described the 2020 Guidelines, published under Gazette Notice No. 5472 of 2020, as requiring all licensees to comply with a 30% local shareholding requirement, with licensed ICT companies given a grace period of up to three years. The requirement sat in paragraph 6.2.4, under the heading “Equity Participation”. For a company licensed partway through that period, the practical requirement in any given year depended on where it fell in the grace window, not simply on the headline figure. Earlier versions of the policy existed, but this article deals only with the 2020 Guidelines and their removal.

The 2023 Removal

In July 2023 the Ministry invited public comment on deleting the equity participation subsection, paragraph 6.2.4 on Market Rules, from the 2020 Guidelines, with written submissions due by 31 July 2023. Its stated rationale was Kenya’s Vision 2030 ambition of becoming a globally competitive knowledge-based economy, and the aim of making Kenya an attractive investment digital hub.

Gazette Notice No. 11079, published in a special issue of the Kenya Gazette on 22 August 2023 and dated 18 August 2023, then made the change. In it the Cabinet Secretary amends the 2020 Guidelines, contained in Gazette Notice No. 5472 of 2020, by deleting paragraph 6.2.4 under the heading “Equity Participation”, and records that the Communications Authority has been notified of the policy amendment under section 5(4) of the Act.

What This Means Today

With paragraph 6.2.4 deleted, the Policy Guidelines no longer contain a local shareholding requirement for ICT licensees. A foreign investor can therefore hold 100% of a Kenyan ICT licensee under those Guidelines without needing a Kenyan shareholder to meet a minimum percentage. Because the rule lived in policy guidance rather than in the Act, it is worth confirming against the Communications Authority’s current licence conditions for your specific category, including broadcasting if that is your sector, before relying on this as settled for the long term. Nothing in section 5C prevents the Cabinet Secretary from issuing fresh guidelines, so a requirement of this kind could return by the same route.

Before structuring around the change, check three things: the conditions on your own licence, whether any later gazette notice has amended the Policy Guidelines, and whether your business also touches a sector with its own licensing statute and ownership conditions, such as payments or lending, which sit with different regulators. The first two checks are quick. The third is where a wholly foreign-owned structure can still meet a condition that the ICT guidelines no longer impose.

A company that brought in a Kenyan shareholder specifically to satisfy the 2020 requirement is no longer required by that paragraph to keep that shareholding. Whether to unwind it is a commercial question about the shareholder’s ongoing role, not a compliance one, and any change to the share register still needs to go through the ordinary Companies Act process, regardless of why the shareholding was originally structured that way.

Frequently asked questions

Can a foreign investor now own 100% of a Kenyan ICT licensee?
Under the current Policy Guidelines, yes. Gazette Notice No. 11079 of 22 August 2023 deleted paragraph 6.2.4, the local shareholding requirement. Confirm the conditions attached to your particular licence category.

Why could the government remove this with a gazette notice instead of a new law?
Because the requirement was never written into the Kenya Information and Communications Act. It sat in policy guidelines that the Cabinet Secretary issues under section 5C of the Act, and the same power can amend them.

Does this apply to broadcasting licensees as well?
Gazette Notice No. 11079 deletes paragraph 6.2.4 from the Guidelines and does not distinguish between licence categories, but check your specific licence category’s current conditions with the Communications Authority rather than assuming.

Could a local shareholding requirement come back?
Section 5C allows the Cabinet Secretary to issue policy guidelines of a general nature by publication in the Gazette, so a policy-level requirement could in principle be reintroduced the same way without Parliament amending the Act. Check current guidance before finalising a long-term ownership structure around its absence.

This article is general information on Kenyan law as at its publication date, not legal advice. Reading it does not create an advocate and client relationship.