Kenya Imposes Tough Rules on Foreign Contractors

Foreign contractors will have to meet new tough rules if they want to operate in Kenya, as the government moves to check the growing influence of foreign builders on the local scene.

The contractors will be required to cede at least 30 per cent of their ownership to Kenyans or sub-contract a third of their works to local firms to qualify for registration in the country.

The foreign builders will be required to file affidavits with the National Construction Authority (NCA) to attest the 30 per cent joint venture or sub-contracting, in addition to submitting proposals for skills transfer.

They will also be required to submit a schedule of projects they are executing with the details of costs and completion dates.

The stringent guidelines, which were formulated by the NCA also restrict state-funded construction projects of below Sh1 billion to local contractors – who will be free to offer a minority stake to foreigners.

In a newspaper advert on Thursday, NCA gave foreign builders operating in Kenya up to May 28 to comply with the new registration requirements failure to which their local operations will be suspended.

The NCA, which was constituted under Act No. 41 of 2011, is mandated to register contractors and to keep a register of builders cleared to work in Kenya.

RELATED: National Construction Authority Registration Regulations

“A foreign person or firm shall subcontract or enter into a joint venture with a local person or local firm for not less than 30 per cent of the value of the contract work for which registration is sought.

“The ratio of ownership of a joint venture for construction work between a local firm and a foreign firm shall be at least 30 per cent for the local firm,” reads the regulations.

The rules, which will also require contractors to seek approval from NCA before employing expatriates, will boost local contractors and help in skills and technology transfer.

In 2012, the government issued proposals seeking to restrict foreign-owned companies to 70 per cent of state contracts but shielded global conglomerates in deals passed between States.

However, the new regulations will affect both state and private sector construction works – which must be “registered with the Authority under the Act”.

The adoption of the new rules will largely affect Chinese companies that have, in the past few years, won nearly all tenders in Kenya’s major road expansion programmes.

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