How Jeff Bezos’ Amazon Forced Ruto’s Hand

Ecommerce and cloud services giant Amazon’s strong stance against Kenya’s requirement of 30% local ownership of foreign ICT licensees helped force the government’s hand as the President William Ruto’s administration looks to scrap it, it has emerged.

Amazon Web Services in April last year disclosed plans to launch an AWS Local Zone in Kenya. It, however, sought to have the 30% equity ownership requirement dropped.

The 2020 ICT Policy guidelines state; “It is the policy that only companies with at least 30 percent substantive Kenyan ownership, either corporate or individual, will be licensed to provide ICT services. For the purposes of this rule, companies without majority Kenyan ownership will not be considered Kenyan, and may thus not be calculated as part of the 30 percent Kenyan ownership calculus.”

Foreign ICT licensees had been given until March 2024 to comply with the equity ownership requirement.

Kenya has in recent months been on a charm offensive meant to attract investment by American firms, including Amazon, into the country, through programs including the US-Kenya business roadshow launched in April this year.

Amazon had set a condition that the  the local ownership requirement be removed for it to ramp up investment in the country, and was reportedly influential in advocating for the policy shift.

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“For Kenya to be an attractive investment digital hub, it is proposed that the equity participation subsection (under section 6.2.4 on market rules) be deleted from the national ICT policy guidelines, 2020,” the CS Eliud Owalo-led ICT ministry now states.

“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 policy on 30% local ownership has affected a number of firms, including telco Airtel. The company would have had to sell a 30 percent stake to comply with the requirement.

The company disclosed in June that it was ready to list its Kenyan venture on the Nairobi Securities Exchange (NSE) if the condition was maintained. President Ruto in March this year revealed plans to change of the policy citing its negative impact in attracting investment to the country.

“This position is untenable and has made it impossible for large corporations to invest in Kenya. We will review this position and remove this requirement to facilitate greater investment in our ICT sector,” Ruto told visiting US investors.

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