Kenya is preparing to implement a bold policy that would require large companies to channel part of their corporate social responsibility (CSR) budgets into funding startups and innovators. The initiative, led by the Kenya National Innovation Agency (KeNIA), seeks to create a sustainable financing mechanism for early-stage ventures struggling to progress beyond the prototype stage. The plan, which mirrors India’s Companies Act of 2013, could make Kenya one of the first African nations to formally link CSR spending with innovation funding, according to Business Daily.
A New Model for Startup Support
KeNIA Chief Executive Tonny Omwansa revealed that the agency is drafting a proposal to establish a national innovation policy mandating that a portion of CSR allocations from corporations be directed into a dedicated innovation fund. The fund would support startups navigating the “valley of death,” a stage where financing is scarce, and reliance on donor funding remains high. “We are exploring how to engage the private sector through the CSR framework so that a portion of their budgets supports national innovation programs,” Omwansa told Business Daily.
Redirecting Private Capital Toward National Priorities
Currently, much of Kenya’s CSR funding goes toward social programs such as education, sports, and community initiatives, often aligned with corporate branding goals. Companies like Safaricom, Equity Group, and KCB have long invested in CSR, while some, including Safaricom and Britam, have extended their efforts to innovation-driven projects. KeNIA’s proposal aims to formalize and expand these contributions, aligning private sector resources with national innovation priorities and ensuring that corporate spending delivers broader economic impact.
Learning from India’s Experience
The proposal takes inspiration from India’s Companies Act of 2013, which compels qualifying firms to allocate at least two percent of their average net profits from the previous three years toward CSR programs. Companies with annual turnover exceeding $112.6 million or net profits above $560,000 are required to comply. India’s model has successfully mobilized billions in CSR funding toward development sectors, and KeNIA believes adopting a similar approach could transform how Kenya funds its innovation ecosystem.
Building on Government Initiatives
This CSR initiative builds on the government’s ongoing efforts to strengthen startup financing. During the 2024 Kenya Innovation Week, President William Ruto announced a KES 1.5 billion ($11.6 million) innovation fund to support local startups, with KES 1 billion earmarked for financing and KES 500 million allocated to KeNIA’s operations. KeNIA now hopes to attract at least three times that amount from private sector contributions through CSR participation, potentially raising an additional KES 4.5 billion ($34.8 million) to expand national startup support.
Tackling Innovation Underfunding
Kenya’s innovation sector continues to face funding constraints despite raising over $638 million in venture capital in 2024, most of it from foreign investors. Local startups frequently struggle to secure early-stage capital, leaving many promising prototypes uncommercialized. KeNIA’s CSR-linked model is designed to bridge this gap by providing predictable, domestically anchored funding and empowering corporations to directly contribute to the country’s innovation pipeline.
A Step Toward Sustainable Innovation
Omwansa noted that aligning CSR efforts with innovation can create mutual value for corporations and entrepreneurs. Companies would gain access to emerging technologies relevant to their industries while helping startups scale viable solutions that address national challenges. “If we can mobilize these CSR resources, we’ll strengthen Kenya’s innovation pipeline and reduce dependency on external funding,” Omwansa said.
While still in draft form, KeNIA’s CSR proposal signals a significant shift in Kenya’s innovation policy. By leveraging private sector CSR budgets and integrating lessons from India’s framework, the country aims to build a sustainable model that empowers startups and stimulates inclusive economic growth. If implemented, the policy could redefine corporate responsibility across Africa, transforming CSR from philanthropy into a powerful tool for innovation and national development.
Source: Business Daily