A new legislative proposal is poised to spark intense debate between Kenyan authorities and multinational corporations, as Laikipia County Woman Representative Jane Kihara prepares to introduce the Local Content Bill, 2025 to the National Assembly.
The proposed legislation seeks to reform established procurement systems that, based on a recently published policy research report, facilitate the continuous outflow of billions of shillings from Kenya’s economy each year.
Findings from the LCB Policy Research Report 2026 reveal that Kenya loses around KES 200 billion annually through what is termed “service cost leakage.” This phenomenon occurs when multinational enterprises route operational expensesincluding software licensing, logistics, and maintenancethrough connected entities based overseas rather than procuring services domestically.
The report further indicates that the wider economic consequences are substantially more severe. Accounting for the multiplier effect, the nation is projected to miss out on as much as KES 1 trillion in potential yearly economic activity due to these international transactions.
“This revenue is already generated within the economy; the issue is whether it remains locally or is exported abroad,” the report emphasizes, highlighting the fundamental argument supporting the proposed legislation.
Several prominent firms listed on the Nairobi Securities Exchange are presented as examples of this trend. Safaricom PLC reportedly transferred KES 37.1 billion to foreign entities in its FY2025 financial statements, primarily for platform licensing and network-related expenditures. East African Breweries Limited is said to channel approximately KES 20.9 billion overseas for distribution, storage, and maintenance services, while BAT Kenya directs about KES 1 billion offshore through foreign-managed logistics arrangements.
In contrast, the report showcases KCB Group as a benchmark for locally-focused procurement. Despite recording revenues of KES 213.8 billion, the bank sources the majority of its operational services within the countrydemonstrating that global competitiveness can harmonize with robust local supply chains.
The infrastructure sector emerges as another significant concern, with what the report describes as a “triple external drain.” Kenya regularly obtains financing from foreign lenders, employs international contractors for project implementation, and depends on offshore insurers for risk coverage. High-profile developments such as the Standard Gauge Railway and the Nairobi Expressway illustrate this pattern. Consequently, an estimated KES 50 billion in insurance premiums is transferred abroad annuallyfunds that might otherwise support domestic investment and reduce the expense of public borrowing.
If passed, the Local Content Bill, 2025 would mandate affected companies to source at least 60 percent of their goods and services from Kenyan businesses, a strategy designed to bolster local industries and maintain capital within the nation.
Critics of the Bill have contended that local enterprises may lack the capability to meet the standards demanded by multinational corporations. Nevertheless, the report refutes this claim, noting that Kenyan transportation companies already manage approximately 90 percent of the national trucking fleet, while the nation’s technology sector continues to establish itself as one of the most advanced across Africa.
“The capacity exists,” the report concludes. “What is absent is a regulatory framework compelling multinationals to leverage it.”
As Jane Kihara advances to formally present the Bill, attention now turns to Parliament, where legislators confront a critical decision on whether to reshape Kenya’s economic framework to retain more value domestically or preserve the existing order that detractors claim perpetuates capital flight.