Kenya is pursuing ambitious digital reforms, including a substantial investment in social media monitoring and new taxation policies for foreign startup exits, while Nigeria grapples with a regulatory tug-of-war affecting crucial airtime borrowing services. These developments highlight evolving digital landscapes and regulatory challenges in East Africa's largest tech market and Nigeria.

The Kenyan government is seeking KSh 2.7 billion ($21 million) from parliament to develop an AI-powered system designed to monitor online discourse. This proposal, presented on May 25 by the State Department for Broadcasting and Telecommunications, aims to combat misinformation, disinformation, and 'malinformation.' The funds would establish a National Communication Center for coordinated government messaging and implement AI software to scan social media in real-time, track public opinion, identify trending narratives, and flag problematic content. Critics, however, warn that such technology could easily be repurposed for political surveillance. This initiative follows recent moves like a 90-day ultimatum for X to open a local office, proposed broader government data collection powers in the Statistics Bill 2026, and financial reporting measures in the Finance Bill 2026, suggesting a broader strategy to build a comprehensive digital oversight system. These efforts are largely a response to the 2024 Finance Bill protests, where young Kenyans effectively used social media to organize and livestream demonstrations, leading to a significant policy reversal. After courts prohibited the blocking of social media platforms, the government's focus shifted from censorship to real-time monitoring and response. This technologically advanced push is Kenya's most ambitious yet, and it is expected to ignite a significant digital rights debate given the country's strong digital rights community and vocal online population. Parliament's Budget and Appropriations Committee will determine the approval of these funds, with civil society groups already preparing for a major challenge.

Concurrently, Kenya is moving to impose a 15% capital gains tax on foreign investors when they exit local startups, a change that could profoundly impact East Africa’s venture capital landscape. The proposed Finance Bill 2026, tabled on May 25, targets a loophole where foreign investors often structure their investments through offshore holding companies, thus avoiding local taxes upon exit. The Treasury aims to amend the Income Tax Act to claim tax rights over deals involving Kenyan startups, regardless of where the transaction is formalized. This revenue-raising measure comes amid government debt strain and public backlash against direct consumer taxes, particularly after the 2024 Finance Bill protests. The government hopes taxing foreign investors will draw less public anger than increasing taxes on ordinary citizens. While Kenya has actively promoted itself as a regional innovation hub, attracting global capital, this new tax could deter some investors, especially in a cautious global funding environment where African startups increasingly rely on mergers and acquisitions for exits. Parliament is currently reviewing the proposal, and the outcome will determine if Nairobi retains its appeal as an easy market for venture funding and exits.

Meanwhile, in Nigeria, Airtel Nigeria and Globacom have reactivated their airtime borrowing services, Airtel Advance and Glo’s “Borrow Me Credit,” on May 25, 2026, after weeks of disruption that affected millions of users. The restoration followed the temporary suspension of enforcement by the Federal Competition and Consumer Protection Commission (FCCPC) of its controversial digital lending regulations, a decision prompted by an interim court order issued by the Federal High Court in Lagos on April 15 after a lawsuit by the Wireless Application Service Providers Association of Nigeria (WASPAN). The status of MTN’s XtraTime service, however, remains unconfirmed. This situation stems from a regulatory dispute: the FCCPC views airtime borrowing under its digital lending rules, while telecom operators and the Nigerian Communications Commission (NCC) classify it as a telecom value-added service. WASPAN and the NCC publicly support the latter, arguing the lending rules target abusive loan apps, not telecom services. Despite the court order, the FCCPC intends to challenge it and reassert its jurisdiction. The disruption had a significant impact as millions of low-income Nigerians depend on these services for urgent calls. Industry estimates indicate hundreds of billions of naira are processed annually through airtime advances. Telcos initially suspended services due to regulatory uncertainty and potential fines under the FCCPC's Digital, Electronic, Online or Non-Traditional Consumer Lending Regulations (DEON rules), which were introduced in July 2025 to curb aggressive loan app practices. The legal confusion deepened when a second court ruled MTN’s service suspension unlawful. While Airtel and Glo users can now borrow airtime, the broader fight for clear regulatory frameworks between the FCCPC and NCC persists, threatening future service disruptions if not resolved.