Foreign firms bidding for government tenders will be required to cede at least 30 per cent to local companies or face a Ksh5 million fine and jail terms of up to five years if Parliament approves changes to the law that will likely hit Chinese contractors.
The Public Procurement and Asset Disposal (Amendment) Bill sponsored by Kiambaa Member of Parliament John Wanjiku proposes restricting foreign investors from taking up all government tender worth more than a billion to support local firms.
Chinese contractors have edged out local companies, outcompeting them in even county projects and the expanding real estate sector.
“These companies will be required to engage in joint venture procurement with a local firm, wherein at least 30 per cent of the contract’s value must be undertaken by the local firm,” the Amendment Bill states.
Kiharu Mp Ndindi Nyoro speaking during a thanksgiving service in Murang'a County on Sunday, July 2, 2023. Photo Ndindi Nyoro
Kenyans who assist foreigners in registering companies to disguise them as locally owned will also be charged and fined in the process.
The Amendment proposes a fine of Ksh5 million or five-year jail time for Kenyans who will register companies for foreigners to bag tenders above Ksh1 billion.
“Wanjiku’s amendment proposal puts forward penalties to individuals who falsely register on behalf of a non-Kenyan; a fine not exceeding Ksh5 Million or a term of imprisonment not exceeding 3 years of imprisonment or both,” reads a statement from Parliament.
This is the third time that Parliament is trying to limit foreign firms from local tenders, with previous attempts failing.
In 2020, the Finance Committee rejected a proposal to restrict foreign companies from taking part in tenders below Ksh1 billion, arguing that it would affect foreign direct investments.
The amendments by the Kiambaa legislator have already been approved by the Committee which is set to table a report on the floor of the house once the legislators return to Parliament after recess.
Local firms struggle to get funding to compete with foreigners in State contracts, which sees most opt out.
Chinese firms have access to cheap loans, giving them an edge over local firms.
Kiambaa MP John Wanjiku appearing before the National Assembly Budget Committee on September 8, 2023. Photo Parliament of Kenya