Africa has a thriving startup ecosystem. According to The Startup Impact report by Enpact, the Startup Friendliness Index (SFI) of Kenya’s capital, Nairobi, is ranked 7 out of 16 cities assessed in the Middle East and Africa region. This highlights a fairly stable startup environment however,there is still a need for improvement. Countries such as Senegal and Tunisia began their journey to a well-enabled startup ecosystem through creation of startup acts and healthy discussions with all industry players. Such actions led to positive change such as reduction of startup registration fees from $41 to $16.50.
With high taxation levels and unsuitable policies, startups in Kenya find the environment quite hostile as they strive to stay afloat. Local startups highlight the need for change in their sectors which can be chartered through efficient and strategic advocacy. How can Kenya charter its way to a stronger startup ecosystem like its fellow nations? What steps can players in various sectors take to carry out effective startup lobbying that will yield results?
To answer these questions, we held our #WhatsGood series to discuss how startups can influence the law-making process – especially for laws that affect businesses in the county and national level. Our #WhatsGood StartUp Lobbying webinar aimed to encourage a mindset shift in startups from compliance to regulatory influence.
We were honored to host industry professionals from different sectors to share their perspective on startup advocacy in a bid to understand the different parties in the lobbying game and ways to foster healthy collaboration to achieve a healthier startup ecosystem. Our star studded panel included:
- Linda Bonyo – A legal enthusiast who encourages the place of technology in the law industry and employs innovation to ease access to justice for tech startups, improve digital skills for Lawyers and offer policy alternatives within the tech policy arena to African governments.
- Ali Hussein – A tech advocate who is passionate about driving the fintech revolution across Africa through digital technologies that enhance efficiency and offer innovative financial solutions in the fintech ecosystem and across the continent.
- Daniel Ngugi – An experienced legal advocate who is an expert on fast moving consumer goods focused on effectively decreasing the cost of food in the Kenyan market.
The conversation was moderated by Erick Kariuki, an experienced management consultant who is passionate about user-friendly justice, organizational design & strategy, social entrepreneurship and operational excellence.
It takes two to tango. The responsibility of healthy relations and just laws that govern an ecosystem is dependent on both the policy makers and the parties affected. Countries such as Senegal engaged in a co-creation process with policy makers and startup founders to form their Startup Act and improve their ecosystem. A bottom-up consultation process that involved all actors in the tech startup & digital innovation sector, including the government, gave all parties the opportunity to have healthy discussions with the policy makers. The meetings also enabled the startup advocates to have ownership of the creation process which also includes influence from all government departments.
Linda points to countries such as Senegal as a blueprint for startup advocacy in Africa. She believes in collaborative efforts and states that it is critical for startups to be involved in the lawmaking process because they best understand their sector. Lawmakers lack the knowledge required to create favorable policies and can only assume what regulations would benefit startups. She also highlights the “on and off” trend that is prevalent in Kenya’s startup advocacy activities and encourages startups to be proactive in lobbying so that they can draw the attention of the policy makers and regulators and help them understand their pain points.
Linda also states that startups should not feel divorced from the lawmaking process due to the lack of in-depth knowledge of the law. She reminds startups that their priority is to know their needs and also remember that they are citizens or residents who, under the Constitution of Kenya, are granted rights and given the opportunity to voice their concerns if their rights are neglected.
“We have instances where lawmakers create laws but have no understanding of that particular sector. They will sometimes rely on foreign organizations or consultants who have their own agenda. If local startups do not engage with the policymakers their interests will never be taken care of. Advocacy needs to be continuous to ensure that every law, act or amendment is tailored towards their needs.”
“Startups need to understand that it is not a requirement for them to have a deep knowledge of the law to engage with lawmakers. Instead they should know how their sector works and what it needs so that they can clearly present their concerns to the policy makers who can actualize their needs.”
Startups view lobbying as a costly venture. 85 percent of businesses in Kenya are micro,small and medium enterprises who do not have the financial resources to undertake continuous lobbying activities.
Ali acknowledges that money does play a part in startup lobbying. Large tech companies in the USA and across the world spent an estimated total of 500 million dollars in lobbying activities in 2019– a sum that startups cannot afford. He however states there are other cost effective ways startups can use to achieve advocacy.
A good reputation is beneficial to a business as it creates trustworthiness amongst stakeholders. Positive brand identity can assist startups to influence parties such as consumers and investors to rally behind them thus garner support in quorum and finances. Ali also stresses that advocacy can be a shared agenda and not solely a startup endeavour. He explains that startups can collaborate with other parties to help them rally. Bodies such as law firms, PR firms and blogging societies can assist startups to voice out their needs to policy makers. Startups will have a lighter burden to carry as such partnerships are cost effective, time saving and teamwork reliant. Startups can also join local lobbying associations for effective representation such as the Kenya Private Sector Alliance (KEPSA) who are focused on high-level advocacy on law and policy-related issues.
“If you want to go fast, walk alone. If you want to go far,walk with other people. Let us learn how to plug in the holes that we are unable to fill by ourselves through partnerships. We can work together to lobby on startup matters with other parties such as law firms, PR firms and bloggers who can get our message out. We should never feel that we are out in the deep end and we can’t swim.”
“We are bigger as a whole than as individuals. Startups can join associations such as KEPSA which has been extremely effective in advocacy issues. KEPSA is not only for big business but also embraces the startup ecosystem.”
Regulations are a way that the government intervenes in the market economy to maintain structure and order. Regulations yield important benefits to the public but can impede productivity of businesses if created with a lack of knowledge of the affected industries.
Daniel is aware of this and notices that several micro and small enterprises show laid back tendencies in startup advocacy as government policies do not affect them as much as medium and large enterprises that face stringent policies such as heavier tax burdens and other unfavorable regulations that affect their supply chains. He insists that micro, small and medium enterprises should be active in policy making as they will feel the effects of these regulations with the growth of their businesses. The government is quick to take notice of enterprises who have achieved a certain level of growth. This recognition is accompanied by rules and regulations which may be unfavorable for these businesses if they continue to take a hands-off approach in startup advocacy.
Daniel further encourages startups to understand their regulatory environment and the respective key players. He advises startups to become acquainted and build a rapport with industry regulatory bodies to create influence over policy makers and regulators. This will assist startups have a willing audience that they can easily voice their needs.
“Government speaks the language of regulation. The government will take notice of growing startups and industries which will result in increased rules and regulations. Get involved in discussions with policy makers early on so that you can influence the policies that will impact your industry as your business grows.”
“Understand the regulatory environment you work in. Visit the regulatory offices & create a rapport with those regulators to help you begin conversations around policies both at the county and national levels.”
As the discussion came to a close it was evident that there is room for improvement in the startup lobbying scene. The attitude that startups will have towards advocacy will play a significant role in the health of their ecosystem. The panelists concluded the meeting as they shared their final thoughts on the requirements for a good startup lobbying team.
“A good startup lobbying team is one that is organized, engaged, responsive & innovative.Such a team should be proactive through driving continuous conversations with policy makers & creating inexpensive ways such as events to voice their opinions.” ~ Linda Bonyo
“A good startup lobbying team is one that knows the different regulatory bodies and understands the regulatory systems that are in place. They are proactive in learning about their environment and driving discussions around policies with policy makers and regulators.” ~Daniel Ngugi
“ A good startup lobbying team fashions a SWAT Team; a team that is dedicated to lobbying through continuous advocacy activities. They should have early warning systems that enable them to influence regulations that affect the startup ecosystem well before they are issued.” ~Ali Hussein