All tenders valued at less than Sh1 billion will be reserved for Kenyan firms under a government-backed push to protect them against well-funded foreign companies.
This is contained in proposed amendments to the Public Procurement and Asset Disposal Act of 2015 tabled in Parliament.
The proposal, if passed, will boost the prospects of local firms that are increasingly finding it difficult to compete against foreigners, notably Chinese companies, in the race for tenders at the national and county governments.
“Any procurement of less than Sh1 billion shall be awarded to a local firm, a foreign firm shall be eligible for procurement of contracts of more than Sh1 billion where the foreign firm has entered into a joint venture procurement with a local firm for not less than 30 per cent of the value of the procurement,” reads the Bill.
The Public Procurement and Asset Disposal (Amendment) Bill 2024 is sponsored by Kuria Kimani, the chair of the Finance and Planning Committee.
Participating in government tenders is critical for many companies since the State is the largest spender in the economy, buying goods and services worth trillions of shillings each year.
Local contractors have increasingly voiced concerns over the influx of well-funded foreign firms that they say have locked them out of projects, mainly in the roads and housing sectors.
Chinese firms have also flocked the Last Mile Connectivity projects meant to connect homes in rural areas to subsidised electricity, further squeezing out Kenyans.
For example, a handful of Chinese firms have, since 2013, scooped over Sh1 trillion worth of government tenders in the roads and transport sector, underscoring the plight of Kenyan contractors.
This is the second time that a push to reserve all government tenders worth less than Sh1 billion for Kenyan firms has been made.
In 2020, former Deputy President Rigathi Gachagua sponsored a similar Bill, but it was rejected by Parliament.
The new Bill is a step down from last year where there was an attempt to amend the Act and reserve all tenders worth Sh20 billion and below to Kenyan firms.
The National Treasury had last year opposed the push, saying that local companies lacked the resources and skills to deliver on the huge projects.
Chris Kiptoo, the Treasury PS, further added that locking foreign firms from deals worth less than Sh20 billion would lead to capital flight, hit direct investment, and also push the firms to neighbouring countries.
The Public Procurement and Asset Disposal (Amendment) Bill, 2024 is also introducing stiff penalties and sanctions for any Kenyan who will be found guilty of registering a firm on behalf of a foreigner in order to clinch tenders valued at less than Sh1 billion.
Kenyans found to have registered a firm on behalf of a foreigner in order to undercut local firms will be slapped with a fine of Sh5 million or three years in jail or both. A foreigner found to have falsified documents and registered a firm as a Kenyan will be fined Sh5 million or fined for five years or both.
