Kenya reviewing 30 percent local shareholding rule for foreign firms

NAIROBI, KENYA: Kenya is reviewing a rule requiring foreign companies to allocate 30 percent shareholdings in their operations in the country to local investors, as set out in a recent companies law, a government minister said.

The section of the law has drawn criticism from overseas interests, who say it will discourage investments into East Africa's biggest economy, frustrating efforts to create jobs and boost growth.

"That is being reviewed at the moment and we have made our position very clear that the way it has been drafted needs to be relooked at," Adan Mohamed, minister for enterprise and industrialisation, told Reuters after a meeting of government officials and business executives.

"Certainly the way it is at the moment is not in the spirit that we have been doing business in this country."

Several foreign firms, including Vodafone and Diageo , have operations in Kenya.

Jutta Frasch, Germany's ambassador to Kenya, said the country's development partners wanted the rule removed.

"If you want to get direct investment and create jobs in the country, please change that rule," she told the same meeting of government officials and business executives on Friday.