THE LOCAL CONTENT BILL, 2025
Status Timeline
Proposed
Active now
Public Review
Pending
Debate
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Executive
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Final
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60% Sourcing Quota for Services and Goods
Foreign companies operating in financial, insurance, construction, transport, warehousing, logistics, and security sectors must source at least 60% of their services and locally manufactured goods from local companies, where they meet prescribed standards.
80% Kenyan Workforce Requirement
Any foreign company operating in Kenya must ensure that Kenyan citizens make up at least 80% of its workforce. It must also employ qualified Kenyan citizens in management and across all other organizational levels in compliance with Article 41 of the Constitution.
Mandatory Sourcing from Kenyan Farmers
Foreign companies operating in Kenya that require agricultural produce as raw materials for manufacturing are legally obligated to source 100% of those agricultural materials from Kenyan farmers.
KSh 100 Million Minimum Corporate Fine
Failing to comply with the local content quotas is a criminal offence. Convicted body corporates face a minimum fine of KSh 100 million, while chief executive officers of non-compliant companies face a minimum prison sentence of one year.
Bill No.
National Assembly Bills No. 45
Gazette No.
Supplement No. 167 of 2025
Sponsor
Jane Kagiri
Background
Currently, the lack of a comprehensive local content regulatory framework in Kenya has restricted local industry growth, leading to unfair business practices and minimal positive economic effects from foreign direct investments due to profit repatriation. The Local Content Bill, 2025, aims to promote local industry, boost the domestic manufacturing and agricultural sectors, and enhance employment opportunities for Kenyan youth by prescribing minimum local content quotas for foreign companies operating in the country.
Key Amendments
The Bill introduces a new regulatory regime for local content, applying specifically to foreign companies carrying out business in Kenya. It establishes legal requirements for sourcing local goods, services, and labor across specific economic sectors, including financial, insurance, construction, transport, warehousing, logistics, and security services.
New Obligations
Under Section 4 of the Bill, foreign companies must adhere to several key quotas and obligations:
- Local Goods and Services Sourcing: Foreign companies must source at least sixty percent (60%) of their locally manufactured goods and services from local companies, provided the goods and services meet relevant standards.
- Capacity Building: Foreign companies are required to provide technical and other capacity-building support to local companies to ensure compliance with prescribed standards.
- Agricultural Sourcing: Any foreign company requiring agricultural produce as raw materials for manufacturing must source one hundred percent (100%) of such produce from Kenyan farmers.
- Workforce Quotas: Foreign companies must employ qualified and skilled Kenyan citizens in management and at all levels of the organization, ensuring that at least eighty percent (80%) of the total workforce consists of Kenyan citizens in compliance with Article 41 of the Constitution.
Penalties
Section 4(8) establishes severe penalties for individuals and corporations that contravene local content requirements:
- Body Corporates: Subject to a fine of not less than one hundred million shillings (KSh 100,000,000) upon conviction.
- Chief Executive Officers: Subject to imprisonment for a term of not less than one year upon conviction.
Transitional Provisions
Under Section 6, all rights, obligations, and contracts currently existing between a foreign company and a supplier of goods or services prior to the commencement of the Act shall remain fully in force for the unexpired period of those contracts.
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