NAIROBI (Reuters) - Kenyan President Uhuru Kenyatta on Friday approved a data protection law which complies with European Union legal standards as it looks to bolster investment in its information technology sector.

FILE PHOTO: Kenya's President Uhuru Kenyatta signs into law the Finance Bill 2019 at State House in Nairobi, Kenya November 7, 2019. Presidential Press Service/Handout via REUTERS

The East African nation has attracted foreign firms with innovations such as Safaricom’s M-Pesa mobile money services, but the lack of safeguards in handling personal data has held it back from its full potential, officials say.

“Kenya has joined the global community in terms of data protection standards,” Joe Mucheru, minister for information, technology and communication, told Reuters.

The new law sets out restrictions on how personally identifiable data obtained by firms and government entities can be handled, stored and shared, the government said.

Mucheru said it complies with the EU’s General Data Protection Regulation which came into effect in May 2018 and said an independent office will investigate data infringements.

Companies such as Kenya Airways and tourist hotels will have to comply when handling personal data from clients, Mucheru said, as will phone-based lenders such as Safaricom, which amasses personal data through services offered jointly with local banks.

Amazon Web Services, part of the Amazon group, said on Friday it will set up part of its cloud infrastructure in Kenya, adding it was encouraged by the new law. It did not give a value for the new investment.

Teresa Carlson, vice president of Amazon Web Services, said the new law paves the way for the company’s investment in Nairobi, according to a government news release.

Those violating the law face a maximum fine of 3 million shillings ($29,283) or two years in jail, a copy of the law seen by Reuters showed.

“It will come down to implementation and enforcement but, we have been waiting on this for seven years so it is a start,” said Nanjira Sambuli, a senior policy manager at the World Wide Web Foundation, a web access advocacy group.

A lack of data protection legislation has also hampered the government’s efforts to digitize identity records for citizens.

The registration, which the government said would boost its provision of services, suffered a setback this year when the exercise was challenged in court.

“The lack of a data privacy law has been an enormous lacuna in Kenya’s digital rights landscape,” said Nanjala Nyabola, author of a book on information technology and democracy in Kenya.