Explainer: New bill seeks to transform how foreign firms hire & operate in Kenya

Kenya is on the brink of a major shift in how foreign companies do business in the country with a new bill in parliament seeking to rewrite the rules governing how foreign companies operating in the country source goods and hire local talent.

The Local Content Bill, 2025, proposed by Laikipia Woman Representative Jane Kagiri signals a turning point in Kenya’s pursuit of a more inclusive and domestically rooted economy in which local goods, services, and labour are prioritized by companies operating in the country.

It seeks to expand economic opportunities for Kenyans with a clear framework that will ensure Kenyans benefit from majority of employment opportunities including top positions, provided they hold the right qualification.

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“As Kenya continues to grapple with youth unemployment, it is paramount that a legal framework that fosters job creation be put in place to ensure that foreign investments in Kenya create employment opportunities for the Kenyan youth,” reads part of the bill.

At least 80% Kenyan workforce & 60% local sourcing

The bill will slam the brakes on foreign companies that have n the past been accused of importing labour into the country, particularly to take up jobs that Kenyans who are qualified, skilled and experienced can benefit from.

If it sails through all the stages and becomes law, companies will have to ensure that not less than 80% of their workforce consists of Kenyan citizens.

A foreign company shall ensure that at least eighty per cent (80%) of the workforce of the company are Kenya citizens and comply with Article 41 of the Constitution on fair labour practices including the right to fair remuneration of workers.

The bill also seeks to power economic growth by reducing repatriation of earnings through a clear framework obligating companies to source goods and services locally.

Companies will be required to source at least 60% of their goods locally, a move that will significantly reduce the repatriation of earnings and have more benefits across the chain.

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A foreign company shall source at least sixty percent (60%) percent of locally manufactured goods and any of the services listed under sub-section (2) from local companies, where the goods and services meet the relevant prescribed standards.

Sectors to benefit & consequences for non-compliance

Sectors poised to benefit from the bill include agriculture, manufacturing and local businesses dealing in supplies and services with more employment opportunities also becoming available for the youth.

Firms engaged in agriculture-related supplies will need to source all agricultural products locally, with a clear framework to allow imports in the event of a deficit.

A foreign company undertaking any business in Kenya which requires agricultural produce as raw materials for manufacture of goods, shall source all the agricultural produce from Kenyan farmers.

The bill proposes a fine of Sh100million for companies that fail to comply and a prison term of not less than one year for the Chief Executive Officer.