The government is planning to subdue dominance of foreign firms in local tenders as part of a strategy to promote local companies and spur economic growth.
As part of the plan, a new bill seeks to lock out foreigners from local tenders valued at less than Sh1 billion. However, those seeking contracts above Sh1 billion are required to enter joint ventures with local firms.
“The principal object of the bill is to amend the Act to prescribe the threshold of procurements that shall be awarded to local firms,” the Public Procurement and Asset Disposal (Amendment) Bill, 2024 says.
Local firms struggle to get funding to compete with foreigners in state contracts, forcing them to opt out.
Chinese firms, for instance, have access to cheap loans and advanced technology, giving them an edge over local firms.
The proposed law sponsored by National Assembly Finance Committee chairman Kuria Kimani has been published for introduction in the National Assembly for first reading.
“Any procurement less than Sh1 billion shall be awarded to a local firm,” the Bill says.
It says a foreign firm shall be eligible for tenders above Sh1 billion but only if such a firm has entered into a joint venture with a local one for not less than 30 per cent of the procurement deal.
The procuring entity, the Bill states, shall specify the goods, works and services that shall be undertaken by a local firm under the joint venture procurement.
The Bill spells out tough penalties for a person who registers a company on behalf of a foreigner to benefit from local tenders.
Upon conviction, such a person shall be eligible for a fine not exceeding Sh5 million or three years in jail or both.
“A foreigner who registers a company by misrepresenting himself or herself as being Kenyan exhibiting unfair competition and seeking to benefit from procurement shall commit an offence,” it says.
Such a person shall be jailed for five years, fined Sh5 million or suffer the two punishments.
The Bill says a local firm that wins a tender shall not subcontract a foreign company unless the knowledge, skill, good or service is not available in the country.
For purposes of ensuring sustainable promotion of local industries, the Bill says an entity shall procure 40 per cent of its goods and services from a local manufacturer or local service provider.
“The Bill further seeks to ensure procuring entities shall set out specific goods, works and services to be undertaken by a local firm in joint venture procurement,” the Bill says.
“A procuring entity shall on a quarterly basis report to the cabinet secretary (National Treasury) on its compliance.”
The Bill mandates Treasury CS to publish in the Kenya Gazette a Preferential Procurement Master Roll specifying locally manufactured goods that shall be procured locally by every procurement entity.
The Bill mandates the entities to make prompt payments to successful bidders to avoid the pile-up of pending bills.
It provides for strict surveillance and supervision to ensure goods and services provided are not substandard.
“A person who certifies or delivers substandard goods or works that are incomplete, non-existent or whose quality is below specifications contained in the contract commits an offence,” the Bill shows.
If convicted, the person shall be liable to a fine not exceeding Sh1 million,
to imprisonment for a term of not less
than five years, or to both.
If the offender is a body corporate,
the fine shall be Sh10 million.
