A new Bill before Parliament proposes that foreign companies operating in Kenya source at least 60 per cent of their goods and services locally. The legislation aims to strengthen domestic industries, support Kenyan farmers, and create more employment opportunities for local citizens.
The Local Content Bill 2025, sponsored by Laikipia County MP Jane Kagiri, seeks to curb the dominance of imported products, promote locally produced goods and services, and attract responsible Foreign Direct Investment (FDI) while reducing profit repatriation. The Bill requires that local content meet prescribed standards and regulatory requirements. Where these standards are not met, foreign companies must provide technical and capacity-building support to local firms.
A foreign company carrying out business in Kenya shall source at least 60 per cent of locally manufactured goods and any of the services from local companies where goods and services meet the relevant prescribed standards.
The legislation also clarifies that existing contracts at the time the Act comes into effect will remain valid until expiry. Companies that fail to comply could face fines of up to Sh100 million, and their CEOs may face a minimum one-year jail term.
Clause Two of the Bill defines “local content” as “the added value brought to the Kenyan economy through procuring locally available services, goods, supplies and workforce.” It defines a “local company” as one incorporated and registered in Kenya under the Companies Act, with either full Kenyan ownership or a majority of shares held by Kenyan citizens.
The Bill further mandates that foreign companies employ qualified and skilled Kenyan citizens across all levels of management and operations.
A foreign company domiciled and operating in Kenya shall employ qualified and skilled Kenyan citizens in the management and all levels of the organisation of the company.
To strengthen local employment, the Bill requires that “a foreign company shall ensure that at least 80 per cent of the workforce of the company are Kenyan citizens and comply with the constitutional provision on fair labour practices, including the right to fair remuneration of workers.”
Clause Four outlines the sectors where local content requirements will apply, including financial services, insurance, construction, transport, warehousing, logistics, security, and other services as determined by the Cabinet Secretary.
According to MP Kagiri, the absence of a legal framework for local content has hindered the growth of domestic industries. Foreign firms often procure goods, services, and labor abroad, flooding the market with imported products that undercut local businesses.
Meanwhile, foreign investments have delivered limited economic benefits due to profit repatriation, particularly amid rising youth unemployment. It is paramount that a legal framework that would foster job creation be put in place to ensure that foreign investments in Kenya create employment opportunities for the Kenyan youth.
The Bill also prioritizes agriculture, requiring foreign companies to source their agricultural supplies from Kenyan farmers, in line with government policy to develop the sector.
The legal framework is necessary to ensure that foreign companies source their agricultural supplies from Kenyan farmers.
Kagiri added, “The Bill, if enacted, shall hence promote the agricultural sector and improve the livelihoods of Kenyan farmers by guaranteeing markets for their produce.”
