Kenya Moves to Mandate CSR Funds for Startup Financing in Bold Innovation Push
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Kenya is developing a policy that would require large companies to allocate part of their corporate social responsibility (CSR) budgets to support startups and innovators, marking a bold step in the country’s effort to strengthen its innovation ecosystem.
The Kenya National Innovation Agency (KeNIA) is drafting the proposal to create a national framework that channels a percentage of corporate CSR spending into a government-managed innovation fund. The fund would provide financial support to early-stage startups that often struggle to access funding beyond the prototype stage.
According to KeNIA Chief Executive Tonny Omwansa, the initiative aims to align CSR spending with national development priorities rather than leaving it to company-specific interests. “We are exploring how to engage the private sector through the CSR framework so that a portion of their budgets supports national innovation programmes,” he said in an interview with Business Daily. “Most CSR spending today goes to projects that align with company interests rather than broader national priorities.”
Currently, leading corporations such as Safaricom, Equity Group, and KCB direct their CSR budgets toward education, sports, and community development. Some firms, like Safaricom and Britam, have already begun integrating startup support into their CSR initiatives.
The proposal draws inspiration from India’s Companies Act of 2013, which mandates that large firms allocate at least 2% of their average net profits over three years to CSR activities. In India, companies with an annual turnover of about $112.6 million or a net profit of at least $560,000 are required to comply.
Omwansa noted that Kenyan startups operate in an unpredictable funding landscape, relying heavily on grants and external investors. A CSR-linked funding model, he said, would create a more stable and self-sustaining pipeline for innovation. In 2024 alone, Kenyan startups raised more than $638 million in venture capital funding, underscoring the country’s strong position as a regional innovation hub.
The CSR allocation plan complements the KES 1.5 billion ($11.6 million) innovation seed fund announced by President William Ruto during the 2024 Kenya Innovation Week. Of that amount, KES 1 billion ($7.7 million) was earmarked for startup financing, while KES 500 million ($3.8 million) was allocated to KeNIA’s operations.
KeNIA hopes to triple this amount by attracting private sector contributions through the proposed CSR framework. “If we can mobilise an additional KES 4.5 billion ($34.8 million) from corporates, that will significantly expand our capacity to support startups across the country,” Omwansa said.
If approved, the policy would make Kenya one of the first African nations to institutionalise CSR-backed startup funding, shifting the narrative from charity-based CSR to one focused on innovation and sustainable economic growth.
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