The year 2023 saw the introduction of several legislative and regulatory updates in Kenya. Notably, as the year ends, various notable legislative and regulatory policies and strategies are scheduled to be implemented in the coming year.  Implementation of these proposed changes in law will likely impact both the private and public sectors. In this feature, we take a look at some of the legislative and regulatory policies scheduled to be implemented in 2024.

Affordable Housing Levy

The most notable legislative framework is the Affordable Housing levy which was introduced in the Finance Act, 2023 at the rate of 1.5% of the gross salary. This levy was quite discriminatory as it targeted employees and employers. Implementation of the levy was among the various provisions that were challenged in court and declared unconstitutional for failure to provide a legislative framework. Strangely, the same court issued a 45-day stay of order allowing for the levy to continue being imposed. The 45-day stay of order expires in January 2024 and as such the government rushed and drafted the Affordable Housing Bill, 2023 which was read the first time in the National Assembly immediately before the National Assembly broke for its long recess.

The proposed Bill no longer discriminates against the employed but also includes other persons at a rate of 1.5% of their gross salary and income respectively.

National Tax Policy

The National Treasury published the first National Tax Policy which is meant to enhance National Government’s efforts in developing transparent tax policies. This Policy was submitted to the National Assembly Finance Committee which held various public participation engagements on the Policy. The Committee submitted its report which contained a raft recommendation for the National Treasury to adopt.

Some of the recommendations include but are not limited to ensuring the progressivity of the tax band structure whose marginal rate is not higher than the corporate income tax rate. Another recommendation is to ensure the policy provides a comprehensive economic impact assessment and a legal audit report detailing the considered impact of the proposed changes in terms of tax revenue, development, investment, employment, and economic growth for any tax law review. The recommendations will enhance the Policy once it becomes implementable in 2024.

Climate Change

The year 2023 has had several events geared towards climate change. Kenya hosted the Africa Climate Summit in September and President Ruto signed into law the Climate Change (Amendment Act, 2023. The Amendment Act, introduced guidelines and policy directions on carbon market trading to enhance greenhouse gas emissions reductions and removals. Globally, COP28 reached a deal on fossil fuels which initially global leaders had reached an impasse on fossil fuels. Fortunately, a landmark deal on transitioning away from fossil fuels was procured which is expected to accelerate climate action.

In addition, President Ruto was listed in the TIME 100 climate list of change-makers in climate action. To this end, it is expected that the President will introduce in the coming year, measures towards the reduction of greenhouse gas emissions including but not limited to tax measures.

Social Health Insurance Fund

President Ruto made various legislative and regulatory changes geared towards health reforms necessary to attain universal health coverage. One of the landmark changes was the repealing of the National Health Insurance Fund which was replaced by the Social Health Insurance Fund (SHIF) established under the Social Health Insurance Fund Act, 2023. The Act established three funds; the Primary Healthcare Fund, the Social Health Insurance Fund and the Emergency, Chronic, and Critical Illness Fund.

The Ministry of Health recently published the SHIF Regulations for public participation before being submitted to the National Assembly for approval. The SHIF Regulations provide that employees will contribute monthly at a rate of 2.75% of their gross salary whereas, a household whose income is not derived from salaried employment shall pay an annual contribution to the Fund at a rate of 2.75% of the proportion of the household income. The Regulations propose that the amount contributed by either of the above-classified beneficiaries shall not be less than Kshs.300 per month.

Implementation of the SHIF Act, 2023 did not take off as the High Court suspended its implementation following a case filed by Kenya Medical Practitioners, Pharmacists and Dentists Union (KMPDU) on the provisions of the Act which would have infringed on the rights of the citizens.  The court stay orders are scheduled to lapse in February. The National Assembly is currently on recess and it can be speculated that the SHIF Regulations will be among the first legislative instruments that will be considered soon after recess.

Kenya National E-Commerce Strategy 2023

The Ministry of Information, Communications and Digital Economy in collaboration with the Ministry of Investment, Trade and Industry recently launched the Kenya National E-Commerce Strategy 2023. The Strategy outlines strategic areas that cut across policy, investment, and public-private sector coordination. The Strategy will play a key role in ensuring Kenya achieves important milestones in the e-commerce sector.

Strategic goals in the Strategy include but are not limited to improving market entry for start-ups and MSMEs, developing an enhanced online dispute resolution framework, adopting international standards to increase trust for services and commodities online and expansion of data centres to host innovations.  

Ministry of Information, Communication, and the Digital Economy Strategic Plan 2023-2027

The Ministry of Information, Communications and Digital Economy recently released its Strategic Plan. The Plan outlines directions for the Ministry in building on achievements on the previous strategic plans while aligning to the Bottom-Up Economic Transformative Agenda (BETA) and the fourth Medium Term Plan 2023-2027. The Plan will therefore be a key document that the Ministry will refer to in the coming years.

Key result areas in the Strategy Plan include providing legal and regulatory frameworks, expanding broadband connectivity, broadcasting and telecommunication infrastructure services, improving access to digital Government services and products, facilitating the development of Information Technology Enabled Services, increasing public access to information, promoting a secure digital ecosystem and enhancing digital and mass media skills.

Cryptocurrencies

Parliament recently initiated conversations with relevant stakeholders on cryptocurrencies such as the Blockchain Association of Kenya. The conversations entailed developing the necessary legislation to address taxation, risks, and consumer protection in the crypto space. It is expected that in the coming year, the National Assembly will develop a legal framework to address such matters in cryptocurrencies, especially on licensing, governance and operations of cryptocurrency-related businesses.

Artificial Intelligence

A motion was moved in Parliament seeking the Ministry of Information, Communications and Digital Economy to develop a regulatory framework and ethical guidelines for the implementation of Artificial Intelligence to control its potential misuse such as rising cases of misinformation, algorithmic discrimination and autonomous weapons. 

It is expected that in the coming year, the National Assembly will develop a legal framework to address such matters concerning the use of artificial intelligence. This comes against the backdrop of the passage of an AI Act by the European Union that will likely shape regulation of AI globally as was the case with data protection and privacy through the General Data Protection Regulation (GDPR).