If a new law currently before the National Assembly is enacted, foreign company CEOs could face jail and their firms could be fined for failing to comply with requirements such as employing more Kenyans and sourcing raw materials locally.
Sponsored by Laikipia Women Representative Jane Kagiri, the Local Content Bill 2025 proposes a minimum prison sentence of one year for CEOs and fines of at least Ksh100 million for companies in breach once the legislation is enacted.
Having passed the National Assembly, the bill is awaiting assent from the President. It aims to regulate the participation of foreign companies in Kenya’s economy, ensuring that local goods, services and labour are prioritised.
Under the legislation, foreign companies operating in Kenya would be required to source at least 60 per cent of goods and services from local companies that meet the required standards.
Raw Materials Sourcing
Additionally, the foreign firms using agricultural produce as raw materials would be mandated to exclusively source them from Kenyan farmers.
This is in a bid to strengthen the local agricultural sector, which is one of the critical sectors of the economy.
Employment
At the same time, foreign companies will be required to ensure that at least 80 per cent of their workforce are Kenyan citizens and that qualified Kenyans are included at management and other organisational levels.
"Promote the use of a locally available workforce; enhance the benefits harnessed from the supply chain; address issues relating to transfer pricing; and align with international standards, such as the EU, which gives priority to goods and services originating from the EU," it reads in part.
"A person who contravenes any section of this Act commits an offence and shall, upon conviction, be liable to a fine of not less than one hundred million shillings in the case of a body corporate; and be liable to imprisonment for a term of not less than one year in the case of a chief executive officer of a company."
Targeted Companies
Companies that the new law will be targeting include those offering financial services, insurance, construction, transport, warehousing, logistics and security, among others, as will be determined by the Cabinet Secretary for Trade.
Further, the Cabinet Secretary will make regulations to implement the law, including setting standards for goods and services.
According to the Bill’s sponsor, its key intention is to protect the growth of local industries from unfair competition.
Kagiri also noted that investments by foreign companies in Kenya have had a limited positive economic impact, as profits return to other countries where the companies are originally from, and have contributed to unemployment among Kenyans.
