Foreign enterprises in Kenya will now be barred from participating in government bids worth less than Sh5 billion and will be limited to providing labor services solely.
This is one of the new modifications proposed by MPs to the Public Finance Management Act. If the changes are approved, the maximum for foreign corporations bidding on taxpayer-funded projects would be raised from Sh500 million to Sh5 billion, as reported by the Kenyan news publication, The Star.
There have been concerns that foreign businesses, particularly Chinese owned businesses, have won contracts that are legally available to Kenyan businesses, with some of them even building bridges for as little as Sh100 million.
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“The principle act is amended by including that the exclusive preference threshold for citizen contractors which will be Sh5 billion for procurement in respect of works goods and services,” said Mbeere North Member of Parliament Geoffrey Ruku.
In the amendment, Ruku suggests that all readily accessible or easily acquired building materials and other inputs be restricted to Kenya, with foreign contractors limited to labor-only contracts.
The MPs said that the action is intended to protect local contractors who have been marginalized and are now vying for the few positions that are still open in the ministries and counties.
“We have seen recently tenders of works as low as Sh500 million, Sh200 million, and Sh100 million going to foreign companies. So does it mean that Kenyan companies are not worthy to get jobs worth Sh100 million? This will give room to grow our local contractors,” Ruku told the Departmental Committee on Finance and National Planning.
Benjamin Gathiru, a member of parliament for Embakasi Central, requested that the Public Procurement and Asset Disposal Act, 2015 be revised in April by replacing the expression "Sh500 million" with "Sh20 billion."
Gathiru argued before the legislature that under the Jubilee administration, a small number of Chinese corporations gathered road and infrastructure contracts totaling Sh1 trillion, leaving Kenyan contractors to compete for smaller roads and subcontracts.
Nearly all government agencies, ministries, and parastatals love them for their quickness, financial heft, and negotiating skills, which has led to their being locked out of lucrative bids by local companies.