Foreign firms will be barred from government contracts worth less than Sh20 billion if Parliament approves changes to the law that will disproportionately affect Chinese contractors.
To protect local contractors, the Bill proposes raising the limit for foreign firms bidding on taxpayer-funded contracts from Sh500 million to Sh20 billion.
Chinese companies’ dominance has left a bitter taste in the mouths of local contractors, who are now losing out on county roads and real estate projects.
China’s State-linked firms are getting ahead partly due to Chinese government loans, which have increased to $6.56 billion (Sh885.6 billion) in December as Beijing promotes investments abroad.
“The Bill seeks to amend section 157(8) of the Public Procurement and Asset Disposal Act, 2015 by deleting the word Sh500 million and substituting thereof Sh20 billion,” said Embakasi Central MP Benjamin Gathiru, who is behind the latest Bill.
“This is to protect local contractors from competition from international contractors. Kenyan contractors have the capacity to undertake government tenders of Sh20 billion.”
In 2020, the Finance Committee rejected a Bill that sought to prohibit foreign firms from participating in public tenders worth less than Sh1 billion and for jobs that Kenyans can handle.
The Bill was sponsored by then Mathira MP Rigathi Gachagua, who is now Deputy President, and was blocked by the National Assembly Finance and National Planning Committee.
Under the Jubilee administration, a few Chinese companies have amassed road and infrastructure contracts worth Sh1 trillion, leaving Kenyan contractors to compete for small roads and sub-contracts.
Their speed, financial muscle, and negotiating power have won them favour with almost all government departments, ministries, and parastatals, allowing them to eat the lunch of local firms.
The majority of the road and railway contracts, worth approximately Sh777.1 billion, are held by China Communications Construction Co (CCCC) and its subsidiary China Road and Bridges Corporation (CRBC).
China Wu Yi, Synohydro, Jiangxi Engineering, China Railways 21 Bureau Group, and China City Construction Group’s Third Engineering Bureau have also earned hundreds of billions for projects across the country.
Local firms like S.S Mehta, H. Young, and Seco have been pushed to the outskirts as Chinese firms win lucrative road, rail, and electricity contracts.
“The main objective is to raise the threshold that local firms can be granted exclusive access to government tenders not less than Sh20 billion,” said Mr Gathiru.
“By passing this Bill, we will unlock hundreds of billions of shillings for local firms who would bid for mega projects without competing with foreign firms. This is in line with the Kenya Kwanza agenda to offer more tenders to Kenyan young entrepreneurs,” he told the Finance committee.
He estimated that foreign contractors would receive 86 percent of state projects, despite concerns that local firms would be unable to complete large-scale projects.
China’s influence on Kenya’s mega infrastructure development gained traction during President Mwai Kibaki’s last term, with the construction of the Thika Superhighway between January 2009 and November 2012 at a cost of nearly Sh32 billion.
Since then, CRBC and CCCC have gotten the lion’s share of Kenya’s megaprojects, including at least two railways, two ports, and 23 road projects.
They include a $3.5 billion (Sh472.5 billion) standard gauge railway (SGR), a $398 million (Sh53.7 billion) oil terminal at Mombasa port, and road projects such as Nairobi’s Southern, Western and Eastern Bypasses and the A109 National Highway Project.
The Chinese contractors are constructing the Eastern Bypass, Nairobi Motorway, Nairobi Inland Container Depot, Nairobi South Railway Station, Valley Road/Ngong Road/Nyerere Road Interchange, Upper Hill/Haile Selassie Overpass, Naivasha Inland Container Depot, the first three berths at Lamu Port, and the Likoni Floating Bridge.
The government previously stated that they preferred Chinese firms due to their speed of delivery and lower costs, while accusing local firms of subpar work and uncompetitive bids.
Local contractors attribute the Chinese’s quick completion of work to timely payments, whereas Kenyan companies have to wait for years, accumulating pending bills.
