The good, the bad and the ugly of draft local content law

A lack of a ready market for raw agricultural produce, high input costs, and competitive procurement practices have been cited as some of the bottlenecks for Kenyan farmers and suppliers.

But all this could change, thanks to a proposed law currently before the National Assembly.

The Local Content Bill, published in October this year, seeks to ensure that 60 per cent of goods and key services are sourced locally, provided they meet required standards.

If local goods and services do not meet the required standards, the Bill stipulates that the foreign company must provide technical and capacity-building support to help local companies and farmers achieve compliance.

Foreign companies are also required to use 100 per cent of local agricultural raw materials, and 80 per cent of workers in foreign companies operating within the country must be Kenyan.

Failure to this, foreign companies will be hit with a minimum fine of Sh100 million and at least a year’s imprisonment for CEOs for non-compliance.

While proponents of the Bill term it a win for Kenyans, some sector players say it doesn’t offer a level playing field, and Kenyan farmers may also face challenges meeting stringent capacity and quality standards.

Hence, there emerges a need for training, financing, and infrastructure to scale production and improve quality.

The localisation Bill is projected to increase demand for local produce, create new opportunities for farmers to sell their produce.

In readiness for the coming into force of the new law in October next year, some factories, such as Njoro Canning Factory, train farmers on standards and directly buy produce from them.

Quality standards

The company has launched a pilot project to encourage farmers to adopt spice production for the local market, supported by its partnership with Unilever, a British multinational consumer goods company.

Evanson Njuguna, Procurement Manager at Njoro Canning Factory, explains that the factory has worked with contracted farmers for over 30 years.

To meet Unilever’s demand and stringent quality standards, Njoro Canning supports local growers by providing seeds, training, and ongoing monitoring.

“Most farmers growing spices are relatively new to the crops, but progress is steady,” Njuguna said.

“What farmers really need is more exposure, additional training, benchmarking opportunities, and deeper technical knowledge of the materials.

”Despite these efforts, accessibility remains a challenge, particularly during the rainy season when roads in some growing areas become impassable.

“Poor road infrastructure sometimes prevents us from reaching farmers at the farm level,” he added.

Low literacy levels, especially among older farmers, also complicate training initiatives.

But Njuguna is optimistic that the project will expand to include more farmers and achieve the required standards for local sourcing.

For farmers who often struggle to find reliable markets, partnering with Njoro Canning guarantees a ready buyer for their produce.

Regarding the proposed Local Content Bill, Njuguna believes a five-year grace period would be more realistic. “The targets are ambitious,” he said.

“Onboarding enough farmers to produce the necessary volumes will take time. That said, the bill is positive—it gives farmers the chance to diversify into new crops and boost rural household economies.”

Vipul Patel, a director at Njoro Canning, notes that the broader economic environment is currently putting pressure on local businesses, affecting both production output and sales.

In collaboration with Unilever Kenya, the factory—acting as an aggregator—contracts farmers to grow coriander and chilli for its spice-milling operations.

However, the challenging economy has reduced farmers’ purchasing power and overall output.

“Together with Unilever, we are exploring ways to increase volumes and promote these products more effectively,” Patel said.

Working with farmers across the country presents its own difficulties. “Yields have been declining year after year, partly due to unpredictable weather—which we cannot control—and partly because of the rising cost of inputs,” he explained.

Patel recommends greater involvement of local agricultural extension officers to help farmers improve productivity.

At Njoro Canning, field officers provide constant guidance to farmers. “Nearly 90 per cent of our key inputs—mainly coriander and chilli—are sourced locally from Kenyan farmers,” Patel said.

“Only a small portion comes from neighbouring countries.” Currently contracting around 2,000 farmers, Njoro Canning helps them secure markets for their crops.

The main challenges in balancing farmers’ and corporate needs are pricing volatility, risks when crops fail, and consistent availability.

Local sourcing

On the Local Content Bill, Patel acknowledges ongoing efforts to source 90 per cent of produce locally but warns that some required spices, such as cumin, do not grow well in Kenya and would still need to be imported.

“Farmers may struggle to meet both the volume and quality demands for crops that are not naturally suited to our climate,” he said.

Unilever’s PerspectiveUnilever Kenya has significantly increased local sourcing, rising from 10 per cent in 2019 to 70 per cent in 2025.

Despite already meeting—and in some cases exceeding—the thresholds proposed in the local content bill, the company views the legislation as a mixed blessing.

“As currently drafted, the bill could disadvantage industry players like us,” said Luck Ochieng, managing director of Unilever East Africa.

“We are engaging with the relevant authorities to find practical ways to implement it while still supporting the core intent: promoting local sourcing and creating greater value for Kenyan communities.”

Ochieng explained that moving from 30 per cent to 70 per cent local sourcing over four years required substantial investment in building supplier capacity. “When dealing with smallholder farmers, managing the entire ecosystem is complex,” he said.

Farmers often lack working capital and struggle to deliver the required quantity and quality consistently.

To bridge these gaps, Unilever partners with aggregators like Njoro Canning, which provide outreach, agricultural advice, financing solutions, and yield-improvement support.

“Reaching 100 per cent local sourcing is possible, but it will demand significantly more investment and a much larger network of capable farmers,” Ochieng noted.

The Bill’s focus solely on multinational companies has raised concerns about fairness. “It creates barriers for multinationals that do not apply to locally registered firms,” Ochieng said.

“We are the only player in our sector making such heavy investments in local sourcing, yet we would face stricter requirements than competitors. That feels discriminatory.”

Regional competitiveness

He warned that consumers could ultimately bear higher costs and that overly stringent mandates risk deterring foreign investment, undermining Kenya’s regional competitiveness.

“Increasing local raw-material use is good for business—it reduces pressure on foreign exchange,” Ochieng acknowledged.

“However, when manufacturing is already under strain, mandates like these can feel more like barriers than opportunities, especially when responsibility falls disproportionately on a few manufacturers.”He cited examples of multinationals relocating production to lower-cost countries and importing finished goods into Kenya.

“Unilever has chosen to stay for the long term because Kenya remains strategically important—both for its domestic market and as a gateway to the region—thanks to its infrastructure, skilled workforce, and technological progress,” he added.

Alex Okello, a 35-year-old electrical engineer turned smallholder farmer in Njoro, Nakuru County, practices mixed farming on his 10-acre plot.

Under a three-month rolling contract with Njoro Canning, he supplies sweetcorn and coriander for spice production.

Although the contract has no upper limit, production is constrained by land size. On the one acre dedicated to coriander, Okello expects to harvest at least one tonne.

He finds coriander far more profitable than sweetcorn: input costs are roughly Sh30,000 per acre for coriander versus Sh100,000 for sweetcorn.

“The factory provides seeds, training, and regular monitoring throughout the cycle,” Ok1ello said. With favourable weather and irrigation, profits are almost guaranteed.

Coriander also requires very little water, making it well-suited to the semi-arid area.

Encouraged by the returns, Okello plans to sign another contract to expand his coriander production and is urging fellow farmers to consider the crop.