The Local Content Bill, 2025

Summary

Local content is the added value brought to the Kenyan economy through procuring locally available services, goods, supplies and work force.

The Objectives of The Bill

1. To provide a framework for regulation of local content by prescribing minimum local content quotas in various sectors:
2. To promote the local industry and sourcing of locally produced goods and services
3. To boost the growth of the manufacturing industry in Kenya
4. To promote the agricultural sector through sourcing of agricultural produce from Kenyan farmers
5. To enhance the creation of employment opportunities for the Kenyan youth
6. To foster growth through promotion of foreign direct investments and reduce profit repatriation.

Local content requirements

These requirements apply to financial services, insurance services, construction services, transport services, warehousing services, logistics services, security services and any other services that the Cabinet Secretary may determine.

Foreign companies operating in Kenya have to comply with the local content requirements. The requirements are:

1. A foreign company must source at least 60% of locally manufactured goods and any of the services from local companies where goods and services meet the relevant prescribed standards.
2. A foreign company has to provide technical and other capacity-building support to local companies to ensure compliance with the relevant prescribed standards.
3. A foreign company operating in Kenya which requires agricultural produce as raw materials for manufacture of goods, shall source all the agricultural produce from Kenyan farmers.
4. A foreign company domiciled and operating in Kenya must employ qualified and skilled Kenyan citizens in the management and all levels of the organization of the company.
5. A foreign company must ensure that at least 80% of the workforce of the company are Kenyan citizens and comply with the constitutional fair labour practices.

A person who contravenes the requirements commits an offence and upon conviction shall be liable to a fine of not less than KES. 100 million in the case of a body corporate and imprisonment for a term of not less than one year in the case of a CEO of a company.

The Cabinet Secretary has the authority to make supplementary Regulations to ensure the provisions of the Act are carried out better. These Regulations may address other categories of services for which the local content requirements apply, and relevant standards for goods locally manufactured, and any services provided by the local companies. It is required that within a period of one year after the Local Content Bill becomes, the Regulations enabling the Act should be in place.

For the rights, obligations, and contracts between a foreign company operating in Kenya and a supplier of goods or services existing before the coming into force of this Act, they shall continue in force for the unexpired period of the contracts.