On Friday, Kenya’s president, William Ruto was at Silicon Valley in San Francisco to woo American tech investors and companies to invest in the East African country, as part of the US-Kenya Business Roadshow.
Ruto was accompanied on the roadshow by Meg Whitman, US Ambassador to Kenya who previously worked in the Bay Area as an executive at eBay, HP, Walt Disney and Quibi. “Kenya is the largest export market in the US, and it is the gateway to the East African market and with its Silicon Savannah; it is the region’s IT hub,” she said.
“Kenya is a full package investment destination; economically stable, entrepreneurial, secure, innovative with a favourable tax environment, skilled labour force, technological expertise, green energy credentials and a gateway for six undersea fibre-optic cables providing reliable data connectivity,” he said.
Ruto said that Kenya is positioned as “Africa’s business process outsourcing and creative economy hub”. “Kenya is your gateway to the Silicon Savannah, to the East African Community, the most integrated regional market of 500 million, and a Pan-African market of 1.4 billion. If you build it in Kenya, it works for Africa, and if you set it up in Kenya, your African footprint is guaranteed,” Ruto told an audience made up of US investors and tech leaders including Apple CEO Tim Cook, Google’s CFO Ruth Porat, Microsoft COO Brad Smith.
A favourable tax environment?
At home in Kenya, Ruto has been accused of increasing taxes for businesses, including those in the tech sector. Recently, Blockchain Association of Kenya went to court to challenge the legality of the digital asset tax introduced by the Kenyan government through the 2023 Finance Act. The country has also increased its digital service tax from 1.5% to 3%, it also introduced a 10 percent excise duty on imported phones.
However, Ruto insists that “[Kenya has] a tax code that is simple to enforce, consistent, fair, and predictable”. “We have eliminated value-added tax on exported services and the tax on stock-based compensation for employees of startups, as well as the domestic equity requirement for ICT companies,” he said.
In July, Ruto’s administration reversed the 30% shareholding rule that was imposed on Big Tech and other multinational companies in 2016. The rule required these companies to cede at least 30% of their shareholding to persons who are Kenyan citizens by birth.
“Kenya has a vision to be a globally competitive knowledge-based economy by the year 2030. One of the government strategies to achieve the vision includes the development and promotion of the ICT sector to spur investments and create employment for Kenyans,” the Kenyan ICT ministry was quoted in ITWeb.
Of skilled workers and poor labour laws
“Our country is not only a thriving economy of the hardest workers you can find anywhere,” Ruto said. In recent times, Kenya has been accused of poor labour laws that have led to the exploitation of Kenyan workers by Big Tech companies. Meta and Sama, its [former] main subcontractor for content moderation in Africa, have faced several lawsuits in Kenya over alleged unsafe and unfair working conditions.
Kenya’s tech talent pool ranks fourth on the list of African countries with the most professional developers. In the last few years, Big Tech companies have set up shops in the country including the Microsoft Africa Development Centre, Intel AI Developer Lab and Visa Innovation Hub; plans to launch Google Open Product Development Centre and Amazon AWS Local Hub are underway.
“We envisage the successful development of one million digital talents within the next three to five years. This pool of empowered Kenyan talent will be waiting to power your enterprise when you set camp in Kenya,” Ruto said, stating that his administration plans to build digital hubs in each ward in the country.
At the end of H1 2023, 92.13% of the VC funding in Africa went to Egypt, Kenya, South Africa and Nigeria—the top four countries with the highest population of software developers, according to BD Funding Tracker and Africa Developer Ecosystem Report.
The green economy
President Ruto also wooed the investors to back green economy efforts in the country. “Kenya is a global leader in the generation and utilisation of green energy,” he said. “Green, clean energy will define the heart and soul of Kenya’s tech growth and development.”
Recently, Kenya hosted the first Africa Climate Summit where investors pledged to invest $26 billion in the continent, according to Joseph Ng’ang’a, the Summit’s CEO. “The Summit reinforced Kenya’s well-earned credentials as a leader in climate action, green transformation and the commitment to align the global industrial decarbonisation agenda with Africa’s potential,” Ruto added.
In his speech, President Ruto also cited the efforts of e-mobility startups including BasiGo, a Kenya-based EV startup that raised $4.3 million last year to accelerate clean-energy mass transit vehicles in Kenya. Last month, Uber launched electric bikes in Kenya—its first e-mobility product in Africa.
“One thing [is] undeniably clear: the future of green growth is African,” he said.
Driving partnerships
During his speech at the Bay Area, Ruto announced that Safaricom is developing a partnership with Apple Inc to integrate MPESA and its Paypal platform to extend MPESA’s transactional reach globally.
Ruto also met with Sam Altman, CEO of OpenAI and founder of the controversial Worldcoin, which was recently suspended in Kenya over data privacy concerns. Although the outcome of the meeting has not yet been made public, the conclusion of Ruto’s meeting with TikTok’s CEO gives an idea of what might happen next, especially as the president is trying to push Kenya as a favourable market.
Source: Benjamindada