- Bill imposes stringent restrictions on foreign firms getting contracts above Sh1 billion.
- The draft Bill defines a local firm as one which is wholly owned by a Kenyan and fully incorporated in Kenya.
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Any public procurement below Sh1 billion will be awarded to local companies in future if a draft Bill is before the National Assembly passes.
The Public Procurement and Asset Disposal (Amendment) Bill, 2023 further imposes restrictions on foreign companies that bid for contracts worth Sh1 billion and above.
“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 draft Bill states.
The Bill, sponsored by Kiambaa MP John Njuguna Wanjiku, proposes changes to Sections 53 and 70 of the Public Procurement and Asset Disposal Act, 2015 to establish procurement thresholds for both foreign and local companies.
According to the Bill, foreign procuring entities must specify the goods, works, and services that will be carried out by the local firm in the joint venture procurement.
Additionally, the amendment proposes penalties for individuals who falsely register on behalf of a non-Kenyan.
“A person who registers a company on behalf of a non-Kenyan to benefit from procurement under the section commits an offence and shall be liable upon conviction to a fine not exceeding Sh5 million or to a term of imprisonment not exceeding three years of imprisonment or both,” the Bill states.
It adds that a foreigner who registers a company on behalf of a non-Kenyan to benefit from procurement under the section will be liable to a fine not exceeding Sh5 million or to a term of imprisonment not exceeding five years or both.
The draft Bill defines a local firm as one which is wholly owned by a Kenyan and fully incorporated in Kenya.
It further defines a foreign firm as a firm whose shareholding is more than 30 per cent owned or is wholly owned by a non-Kenyan and fully incorporated inside or outside Kenya.
Appearing before the Budget and Appropriations Committee, Wanjiku cited Section 217(2) of the Constitution of South Africa, which establishes provisions for "contract allocation preferences" and the promotion of individuals or groups who have been disadvantaged by unfair discrimination.
“Kenya can develop a robust and well-balanced preferential procurement system that promotes local development, fosters economic growth, and contributes to the overall prosperity of the nation,” the MP stated.
Wanjiku added that once enacted, the Bill would provide opportunities for women, youth, persons with disabilities, and other disadvantaged groups, enabling them to participate in economic activities, gain employment, and contribute to the overall development of the country.
“Consequently, this would support poverty reduction, enhance social equity, and improve the living standards of citizens,” he reiterated.
The Kiambaa legislator further said the proposed draft law seeks to support the long-term sustainability of the local business environment.