Kenya plans to compel large companies to allocate a portion of their corporate social responsibility (CSR) budgets to funding startups and innovators, a proposal that may face resistance from the targeted firms.
Kenya National Innovation Agency (KeNIA) is drafting a proposal to establish a national policy that would channel a percentage of companies’ CSR allocations into an innovation fund. The fund would support early-stage ventures that struggle to secure financing beyond the prototype stage.
“We are exploring how to engage the private sector through the CSR framework so that a portion of their budgets supports national innovation programmes,” KeNIA chief executive Tonny Omwansa told Business Daily. “Most CSR spending today goes to projects that align with company interests rather than broader national priorities.”
Companies like Safaricom, Equity Group, and KCB channel their CSR budgets into education, sports, and community programmes, with Safaricom and insurer Britam already backing startups through innovation initiatives.
The proposal borrows from India’s Companies Act of 2013, which mandates that large firms allocate at least 2% of their net profits over three years to CSR initiatives. In India, companies with an estimated annual turnover of $112.6 million or a net profit of at least $560,000 are required to comply with these regulations.
Omwansa said that Kenya’s startups face an unpredictable funding environment, relying on grants and other external sources. A CSR-linked funding stream would help the country build a self-sustaining innovation pipeline. In 2024, Kenyan startups raised over $638 million in VC funding.
Cash-starved startups
The CSR proposal complements a KES 1.5 billion ($11.6 million) innovation seed fund announced by President William Ruto during the 2024 Kenya Innovation Week. Of that, KES 1 billion will go toward startup financing, and KES 500 million ($3.8 million) to KeNIA’s operations.
KeNIA hopes to attract at least three times that amount from private sector contributions through the 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 implemented, the plan would make Kenya one of the first African countries to direct CSR resources toward startup financing, signalling a shift to leveraging CSR budgets for innovation rather than just charity.
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