The government is leveraging two private members’ Bills to reshape the country’s commerce landscape, potentially introducing a protectionist shift following President William Ruto’s roadside declaration that foreign nationals should be barred from operating micro and small enterprises in Kenya.
The Micro and Small Enterprises (Amendment) Bill by Manyatta MP Gitonga Mukunji and the Local Content Bill, 2025, by Laikipia County Woman Representative Jane Kagiri could, with modifications, provide the legal framework for President Ruto’s plan to draw an explicit boundary around participation in the informal economy.
On September 2, 2026, while addressing Micro, Small and Medium Enterprises (MSMEs) traders at State House, President Ruto announced a crackdown on foreign nationals operating small-scale businesses in the country — a move that could potentially slow the integration of the East African Community (EAC) towards a political federation.
The President made it clear that while Kenya remains open to large-scale foreign investment, low-capital ventures such as hawking and small retail shops should be reserved for Kenyan citizens.
The two proposed laws were published before the President announced the crackdown, but Dr Ruto was explicit that the Local Content Bill, 2025, should be expanded to create a comprehensive legal framework regulating who can participate in small-scale trade.
“We have a Local Content Bill in Parliament on trade. In that Bill, we have proposed that there should be businesses that foreigners should not do here in Kenya, by law,” President Ruto said.
Will Ruto’s directive protect local traders?
The Manyatta MP’s Bill was published on June 20, 2025, read a first time on October 1, 2025, and committed to the Trade, Industry and Cooperatives Committee, chaired by Ikolomani MP Bernard Shinali.
The committee is yet to table its report on the Bill for debate, almost a year after it was introduced.
Ms Kagiri’s Bill was published on October 16, 2025, read a first time on November 26, 2025, and also committed to Mr Shinali’s committee.
The committee, however, fast-tracked Ms Kagiri’s Bill, with its report tabled in the House and debated in four sittings — April 15, April 16, April 22 and April 29, 2026. The Bill is now awaiting the committee stage.
Ms Kagiri’s Bill requires foreign companies doing business in Kenya to source at least 60 per cent of their services, supplies and goods locally or face punitive sanctions.
The proposed law seeks to regulate local content requirements, promote local manufacturing and increase the use of locally produced goods and services.
“A foreign company carrying out business in Kenya shall source at least 60 percent of locally manufactured goods and any of the services from local companies where goods and services meet the relevant prescribed standards,” reads Clause 3 of the Local Content Bill.
The Bill seeks to establish a framework for regulating local content quotas across various sectors, promoting local industries and increasing the procurement of locally produced goods and services.
Burundians queue at Nairobi Embassy to register after Ruto order
Offenders would face fines of up to Sh100 million in the case of a body corporate, while the chief executive officer could face a jail term of not less than one year.
The Bill also seeks to promote agriculture by requiring foreign companies to source agricultural produce from Kenyan farmers, while fostering economic growth through foreign direct investment and reducing profit repatriation.
It states that local content requirements will apply where goods and services meet locally prescribed standards and regulatory requirements.
Clause 2 defines “local content” as “the added value brought to the Kenyan economy through procuring locally available services, goods, supplies and workforce.”
A local company is defined as one incorporated and registered in Kenya under the Companies Act and “fully owned by Kenyan citizens or where the majority of its shareholding is held by Kenyan citizens.”
“A foreign company domiciled and operating in Kenya shall employ qualified and skilled Kenyan citizens in the management and all levels of the organization of the company,” the Bill proposes.
According to President Ruto, Ms Kagiri’s Bill should clearly list, identify and ring-fence specific economic activities — including hawking, operating kiosks and small-scale retail — to ensure they are prohibited by law for foreign nationals.
The President had initially set September 7, 2026, as the enforcement deadline before the government extended the period by 90 days to allow foreign traders to regularise their immigration and licensing status.
Mr Mukunji’s Bill seeks to amend the Micro and Small Enterprises Act to require the Micro and Small Enterprises Authority to promote the marketing, development and branding of products and services offered by micro and small enterprises to increase their consumption in the local market.
It proposes collaboration with relevant agencies to promote the consumption of goods and services produced by local micro and small enterprises, while prescribing mechanisms for the development, marketing and branding of their products and services.
The Micro and Small Enterprises Act provides a legal and institutional framework for the promotion, development and regulation of micro and small enterprises.
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Burundians queue at the Embassy of Burundi Chancery in Nairobi on September 7, 2026 to regularise their documents.Â
Photo credit: Evans Habil | Nation Media Group
It seeks to create an enabling business environment, facilitate access to business development services, support the formalisation and upgrading of informal micro and small enterprises, promote an entrepreneurial culture and strengthen representative associations.
However, where locally available goods and services do not meet the relevant standards, the Local Content Bill would require foreign companies to provide technical and “other capacity-building support” to local companies to help them meet the prescribed standards.
Ms Kagiri’s Bill further provides that existing contractual obligations at the commencement of the Act would remain in force for the unexpired period of the contracts.
To achieve its objectives, the Bill proposes that “a foreign company shall ensure that at least 80 percent of the workforce of the company are Kenyan citizens and comply with the constitutional provision on fair labour practices including the right to fair remuneration of workers.”
Clause 4 states that the local content requirements would apply to services including financial, insurance, construction, transport, warehousing, logistics and security, “and any other services as the CS may determine.”
The Bill argues that the lack of a comprehensive local content framework has inhibited the growth of local industries in key economic sectors, with companies incorporated outside Kenya procuring goods, services, supplies and labour from foreign companies.
It says the flooding of the Kenyan market with foreign goods and services has resulted in unfair business practices, rendering local products less competitive.
The Bill also argues that investments by foreign companies have had limited positive economic impact, including in the creation of jobs, even as the country continues to grapple with high youth unemployment.
“It is paramount that a legal framework that would foster job creation be put in place to ensure that foreign investments in Kenya create employment opportunities for the Kenyan youth,” Ms Kagiri says.
The Bill proposes that, in line with the government’s policy of promoting agriculture and harnessing market opportunities for Kenyan farmers, “the legal framework is necessary to ensure that foreign companies source their agricultural supplies from Kenyan farmers.”
“The Bill, if enacted, shall hence promote the agricultural sector and improve the livelihoods of Kenyan farmers by guaranteeing markets for their produce,” Ms Kagiri says.
It notes that foreign companies currently import agricultural supplies despite adequate supplies of agricultural produce being available locally.
The Bill further seeks to promote the use of locally manufactured goods and services, including transport services, curb tax evasion and encourage the use of locally available labour.
It argues that this would enhance the benefits derived from local supply chains while addressing issues such as transfer pricing and aligning Kenya with international standards, including those of the European Union, which gives priority to goods and services originating from EU member states.
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