(Nairobi) – Kenya’s government is moving to strengthen local companies’ ability to compete for state tenders, introducing a bill that would restrict smaller tenders to Kenyan firms and place strict requirements on foreign companies seeking larger contracts. This measure aims to boost the competitiveness of local businesses, foster economic growth, and ensure that more of the country’s public spending benefits domestic industries.
The Public Procurement and Asset Disposal (Amendment) Bill, 2024, limits foreign participation in public tenders valued below Sh1 billion, reserving these contracts exclusively for local companies. Foreign firms bidding for projects over Sh1 billion will need to form joint ventures with Kenyan companies, allowing locals to take at least 30% of the procurement share.
The bill outlines specific guidelines on how these joint ventures should function, mandating that local firms directly handle a portion of the goods, works, and services involved in these projects. According to the bill, procuring entities are also required to provide quarterly reports to the National Treasury on their compliance with these regulations.
Local companies often face challenges when competing with foreign firms, such as Chinese companies that benefit from low-cost loans and advanced technology. By reserving tenders under Sh1 billion for local businesses, the bill seeks to create a level playing field and reduce the financial burdens on Kenyan companies vying for state contracts.
The bill, introduced by National Assembly Finance Committee Chairman Kuria Kimani, imposes strict penalties to deter foreign companies from sidestepping these regulations. Individuals found registering companies on behalf of foreigners to gain access to local tenders would face a fine of up to Sh5 million or a three-year prison sentence, or both.
Foreigners misrepresenting themselves as Kenyans to access these tenders could face five years in prison, a Sh5 million fine, or both. In addition, Kenyan companies that win tenders are prohibited from subcontracting foreign firms unless the required expertise, goods, or services are unavailable locally.
| Key Provisions of the Public Procurement and Asset Disposal (Amendment) Bill, 2024 |
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| Contracts Reserved for Local Firms: Tenders below Sh1 billion reserved for Kenyan firms |
| Joint Ventures: Foreign firms must partner with local firms for tenders above Sh1 billion |
| Penalties for Violations: Fines and jail time for illegal registration or misrepresentation |
| Reporting Requirements: Quarterly compliance reports to the National Treasury |
| Local Procurement Requirement: At least 40% of goods and services to come from local providers |
The bill emphasizes the importance of developing and sustaining local industries, requiring that at least 40% of a procurement entity’s goods and services come from domestic manufacturers or service providers. The National Treasury will publish a Preferential Procurement Master Roll listing goods manufactured in Kenya that must be procured locally.
To support local suppliers further, the bill requires prompt payments to companies that win bids, helping prevent the accumulation of pending bills that could financially strain local businesses.
The bill also sets standards for quality control, penalizing individuals and companies that deliver substandard goods or fail to meet contractual specifications. Those found certifying or delivering incomplete or substandard work face fines of up to Sh1 million, imprisonment for at least five years, or both. If the offender is a corporate entity, the fine rises to Sh10 million.