Foreign companies operating in Kenya will soon be required to hire at least 80% Kenyan citizens, including in managerial and skilled positions, under a new bill aimed at tightening local participation in the economy.
- •The proposed law tabled before Parliament by Laikipia Woman representative Jane Kagiri (UDA) also compels foreign firms to source at least 60% of their goods and services from Kenyan-owned businesses, while those relying on agricultural raw materials must buy 100% from Kenyan farmers.
- •The measures, according to the bill, are designed to keep more value within the country, boost local industry, and expand employment opportunities for Kenyans.
- •Companies that fail to comply face a minimum fine of KSh 100 million, with CEOs of violating firms liable for at least one year jail term.
“The penal provisions are intended to ensure compliance with the requirements of local content unlike the current practice where companies are only required to submit local content plans indicating how they intend to give consideration to locally produced services and goods,” the bill states.
The proposed law applies to a wide range of sectors including finance, insurance, construction, transport, logistics, warehousing, and security.
The Cabinet Secretary for Trade will issue detailed rules within one year of the law’s passage, while existing contracts will remain valid until they expire.
Foreign firms will also be legally required to help local suppliers meet quality and capacity standards, effectively transferring technical know-how to smaller Kenyan businesses.
The law echoes South Africa’s Black Economic Empowerment (BEE) framework, which encourages companies to increase local ownership, employment, and supplier participation.
Unlike South Africa’s point-based system, however, Kenya’s bill imposes mandatory quotas backed by criminal penalties and multimillion-shilling fines. These strict thresholds could potentially hinder greater investment from foreign firms who might be disincentivized by high legal risks.
Foreign-owned enterprises in Kenya are already driving local employment and skills development, with Kenyans accounting for 98.4% of the workforce in foreign-linked firms, according to the 2024 Foreign Investment Survey.
Yet the survey also highlights persistent bottlenecks that could complicate implementation of Kenya’s proposed localization law. Investors identified electricity costs, financial services, immigration, and business permits as the biggest operational hurdles, alongside broader concerns about taxation, corruption, and the political environment.
Without addressing these structural challenges, mandatory quotas and stiff penalties could strain foreign participation and undermine the proposed law’s goals of boosting local industry.
