New Rules Targeting Foreign Capital Send Mixed Signals In African Tech
· WeeTrackerNew Rules Targeting Foreign Capital Send Mixed Signals In African Tech
By
Staff Reporter
| May 26, 2026
For over a decade, venture capital has been welcomed into African markets with open arms as the missing ingredient for a tech revolution. This year, a cascade of new laws across the continent is sending mixed signals.
Ghana, Kenya, and Uganda have all advanced or enacted measures in recent weeks that tighten scrutiny on foreign capital, from ownership restrictions in strategic sectors to exit taxes and stringent disclosure rules. The cumulative effect is rattling investors and founders at a precarious moment for the continent’s startup ecosystem.
In Accra, a contradictory picture is taking shape. Last month, parliament passed the Ghana Investment Promotion Authority Bill, 2026, scrapping the notorious USD 500 K minimum capital requirement for wholly foreign-owned enterprises; a move hailed as a game-changer for tech founders.
But tucked into Section 37 of a draft National Information Technology Authority bill, not yet before parliament, lies a rule stipulating that licenses for cloud hosting, SaaS, data centres, or government digital partnerships would be reserved for entities “wholly owned by a citizen.”
“This directly threatens the foreign capital, partnerships, and expertise that fuel Ghanaian success stories,” says MacJordan Degadjor, a Ghanaian technology policy commentator, citing homegrown firms Hubtel and mPharma as examples of what is at stake.
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Communications Minister Samuel Nartey George has defended the draft, saying there is “no intent to exclude ‘big tech'” and that the government aims to “proactively protect Ghanaian technology firms” to build local capacity. But concerns remain rife. Technology blogger Alfred warned the bill could “undo years of digital sector progress.”
Meanwhile, Kenya is widening its tax net. The Finance Bill 2026, tabled on May 25, proposes a 15% capital gains tax on offshore sales where shares “derive their value from Kenya”—a direct assault on the holding-company structures that foreign venture capital and private equity investors have used for years to exit without local tax liability.
The move is partly driven by high-profile disputes, including a KES 21 B (USD 161.7 M) tax demand tied to Tullow Oil’s offshore exit. But the Institute of Certified Public Accountants of Kenya (ICPAK) warns the amendment is dangerously broad. “As drafted, the provision may create Kenyan CGT exposure for offshore investor exits, capital raising transactions, group restructurings and internal reorganisations undertaken at holding company level,” the body told parliament.
“In most developed markets, this kind of tax is meant to stop profit shifting. The way it’s drafted in Kenya, it could tax legitimate internal reorganisations—a nightmare scenario for compliance,” said Robert Waruiru, Managing Partner at Ichiban Tax and Business Advisory.
In Uganda, President Yoweri Museveni signed the Protection of Sovereignty Bill into law on May 17, criminalising the promotion of “interests of a foreigner against the interests of Uganda” and requiring government approval for foreign-backed policy work. Rights groups warn the broad language could criminalise political opposition.
Crucially, the final bill amended an earlier provision that would have forced any Ugandan receiving foreign money to register as a foreign agent. The original text, which Bank of Uganda Governor Michael Atingi-Ego warned could trigger “economic disaster,” now applies only to funds received “for political purposes.” Remittances, USD 2.5 B in 2025, or 3.8% of of Uganda’s GDP, were spared, but the episode rattled diaspora and development partners alike.
The timing also brings concern amid a funding slowdown. Data from Africa: The Big Deal shows only 162 unique investors participated in startup deals worth USD 100 K or more between January and April 2026, a five-year low and a 26% drop from the same period in 2025. Total equity funding into African startups fell 13% in the first four months of 2026.
There are concerns that African governments are sending contradictory signals, seeking investments to build a digital future while simultaneously building legal walls to keep investors out.
Some local capital is stepping into the void. The Africa Finance Corporation launched a USD 100 M investment push this month aimed at reducing foreign dominance in startups.
“The challenge is no longer talent or innovation, but the shortage of long-term African institutional capital,” AFC President Samaila Zubairu said. Whether that will be enough to offset the regulatory chill remains an open question.