The law

Read time 3min 40sec

There are a number of laws that have to be taken into consideration by businesses wanting to enter the space. These include the Employment Act, Income Tax Act, The Investment Promotion Act, The Companies Act, Trade Marks Act and IP Act.

"Of these, the Investment Promotion Act spells out the parameters for FDI in Kenya in terms of ownership, local staffing thresholds, skills transfer and use of expats, etc.," says Francis Hook, an independent ICT researcher, consultant and director at digitalfrontiers.

International online legal guide TELELAWS explains that contracts are governed by the general common law principles of contract, which includes freedom of contract. The site states: "As part of that freedom, contracting parties are at liberty to choose which law should govern a particular contract."

The online legal resource further states that the country's securities markets are regulated firstly by The Capital Markets Authority, and then by a secondary regulatory, the Nairobi Securities Exchange Limited (NSE).

Those considering setting up a business in the region should be aware of the Foreign Investment Protection Act (FIPA), which has been established to ensure that the foreign investor has equal opportunities as locals and, as TELELAWS puts it, "there are no restrictions that would inhibit foreign investors from repatriating either redemption proceeds, dividends, distributions or other revenue gained from trading and investing in debt and equity in Kenya into foreign currency offshore."

An online presentation about doing business in Kenya, produced by Coulson Harney Advocates, a member of the Africa corporate law firm, the Bowman Gilfillan Africa Group, says it's necessary for companies operating in specific sectors to be licensed by the relevant regulator.

If you go in as a one-man show and small company, I think you will find it difficult to engage in Africa.

Quinton Van der Burgh, Innovatec Africa

Telecommunications businesses, for example, must secure licences from the Communications Commission of Kenya. Regarding doing business in Kenya, online research from the statutory body KenInvest states that foreigners with the intention to own or run a business in that country must have a work permit from the Ministry of Immigration. There are two types of permits, a Class H permit or a Class A permit, and this depends on the applicant's work status - either a business owner or employee.

One of the reasons why the region is said to be doing so well is because of the focus on collaboration and partnerships - the willingness to do business.

Quinton Van der Burgh, chairman at training and technology solutions firm Innovatec Africa, is straightforward in his assessment of the market, saying that engagement is based on partnerships and a strong sense of 'give-and-take'. "We are finding it to be fairly engaging and good, from the perspective that we have the right partners engaging on that level. If you're not willing to partner and to engage and give away a portion of equity to get business done in Africa, you're barking up the wrong tree."

Van der Burgh feels that engagement is a great deal more difficult if one tries to go it alone, even as a listed or blue chip company. He believes it's important to have a deployment partner who is engaging on a local level and can help to ensure the domestic space is aware of who you are and what you do.

He adds that in a market where there are multimillion-dollar deals being struck, the reliance comes back to you. "They really want to know that if you get a 50 or 70 percent deposit, you are stable and credible enough to handle that deployment," Van der Burgh says. "It's really about your sustainability and credibility. If you go in as a one-man show and small company, I think you will find it difficult to engage in Africa. As much as the opportunities are there, they are not giving these to companies that are not on that level."

This article was first published in Brainstorm magazine. Click here to read the complete article at the Brainstorm website.

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