Government Bill to boost local firms by limiting foreign competition in tender awards
By Maureen Kinyanjui |
The Bill proposes restrictions on foreign firms bidding for local contracts valued below Sh1 billion, reserving such projects exclusively for Kenyan businesses.
The government is set to curb foreign dominance in local procurement through a new bill designed to prioritise local companies and stimulate economic growth.
The Public Procurement and Asset Disposal (Amendment) Bill, 2024 proposes restrictions on foreign firms bidding for local contracts valued below Sh1 billion, reserving such projects exclusively for Kenyan businesses.
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For contracts exceeding Sh1 billion, foreign companies will still be eligible, but only if they enter into joint ventures with local firms, ensuring that at least 30 per cent of the deal goes to the Kenyan partner.
"The principal objective of this bill is to amend the Act to specify the procurement threshold for awards to local firms," states the bill, introduced by National Assembly Finance Committee chairman Kuria Kimani.
The bill, which has already been published for its first reading, is part of a broader strategy to reduce barriers for Kenyan businesses in the face of intense competition from foreign firms with superior access to resources.
Foreign firms, particularly Chinese companies, have historically outperformed local firms in winning state contracts due to cheaper financing and advanced technology.
Local firms often struggle to compete due to limited funding, leading them to forfeit opportunities.
The bill enforces tough penalties for those who attempt to circumvent these regulations by creating shell companies to benefit foreign entities.
Penalties
Individuals found guilty of such actions could face fines up to Sh5 million, imprisonment of up to three years, or both.
Foreigners misrepresenting themselves as Kenyan nationals to gain unfair advantage will face fines of up to Sh5 million, a five-year jail term, or both.
To support sustainable development, the bill mandates that 40 per cent of all goods and services used by an entity be sourced from local manufacturers or service providers.
Additionally, the bill requires government entities to report quarterly to the Treasury's Cabinet Secretary on their compliance with this regulation.
The Treasury CS will also be required to publish a "Preferential Procurement Master Roll" in the Kenya Gazette, listing goods that must be procured from local manufacturers.
To address delayed payments, the bill mandates prompt payments to contractors to prevent the accumulation of pending bills.
The proposed law introduces quality control measures as well.
Anyone who delivers substandard or incomplete goods or services, or who certifies such work, will face severe penalties, including a fine of up to Sh1 million or a minimum five-year jail term.
Corporations found guilty of such violations could be fined up to Sh10 million.
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