Navigating local shareholding rules across East Africa

This requirement traces its roots to post-independence economic policies that aimed at reducing foreign dominance, retaining wealth within local economies, and fostering indigenous industries.

While the region has evolved significantly since then, local ownership rules remain firmly embedded in regulatory frameworks, though they vary widely across jurisdictions and sectors.

Kenya, widely regarded as East Africa’s “Silicon Savannah,” exemplifies a balanced approach.

The country seeks to maintain market openness while safeguarding local interests through sector-specific ownership thresholds. In insurance, at least one-third of an insurer’s paid-up capital must be held by Kenyan citizens or partnerships involving them, while insurance brokers face a stricter 60 percent threshold, limited to East African Community citizens.

Telecommunications operators must ensure that 20 percent of their shares are held by Kenyan citizens within three years of licensing.

Mining companies, on the other hand, are required to list at least 20 percent of their equity on the Nairobi Securities Exchange within three years of commencing production.

Aviation imposes even tighter restrictions, demanding that 51 percent of voting rights be held by Kenyan citizens unless exemptions apply for public interest or humanitarian operations. Pension scheme administrators must also maintain at least 33 percent Kenyan ownership, except where the applicant is a bank or insurance firm.

Moving south, Tanzania has adopted a more protectionist stance to shield domestic sectors from foreign dominance. In the extractive industry, projects exceeding $100 million in capital investment must allocate 30 percent ownership locally through a public offer. Service providers in this sector must form joint ventures with Tanzanian firms holding at least 20 percent equity.

Oil and gas operations require a minimum of 25 percentlocal participation, and even where goods or services are unavailable locally, foreign providers must partner with local firms holding at least 25 percent equity. The Insurance sector mirrors Kenya’s model with one-third local control for insurers, but brokers face a two-thirds requirement.

Media and shipping sectors also impose restrictions, limiting foreign ownership to less than 50 percent in print media and mandating over 60 percent local ownership for shipping companies.

Ethiopia recently liberalised its financial sector, but foreign ownership remains capped. Individuals may hold 7–10 percent of a bank’s shares, while foreign entities can own up to 10 percent, subject to an aggregate limit of 49 percent.

Other sectors, including transport, shipping, advertising, and media, impose caps ranging from 25 percent to 49 percent, often requiring partnerships with local firms. In mining, equity participation shifts from local citizens to the state, which retains a minimum 5 percent free carried interest and may negotiate for additional stakes.

Uganda’s local shareholding requirements are concentrated in the extractives sector, where oil and gas projects involve state participation through production sharing agreements.

Rwanda, by contrast, offers one of the most liberal investment climates in the region, with minimal local ownership restrictions. The only notable limitation lies in insurance, where no individual or affiliated entity may own more than 25 percent of a private insurer’s shares unless classified as a financial or public institution.

The Democratic Republic of Congo enforces local participation primarily in the banking sector. Under OHADA commercial law, at least 45 percent of every bank’s ownership must be held by local or minority shareholders.

This directive has significantly disrupted foreign operations, prompting major international and regional banking institutions to reevaluate their ownership structures and market strategies to ensure compliance.

Local shareholding requirements remain a common policy tool across East Africa, reflecting governments’ efforts to ensure that the benefits of foreign investment are equitably shared with local populations.

For investors, success lies in understanding each jurisdiction’s thresholds, sector priorities, and exemption pathways, and in.

Byron Nguithiki is an Associate at Ernst & Young LLP (EY). The views expressed herein are not necessarily those of EY.