Experts call for caution on new rules curtailing China contracts

The Nairobi-Thika superhighway. The assertion by the article that the imposition of lower speed limits on the Thika Superhighway is illegal is, therefore, not factual and legally incorrect. FILE PHOTO

What you need to know:

  • At least 30 per cent of the monetary value of a project should go to local contractors. This is possible through joint ventures or sub-contracting, the rules note.
  • Mr Murimi, however, disputes the requirements of the Act, saying they are not in tandem with the developments that Kenya has made with China.

Fresh laws limiting foreign contractors could hurt Kenya’s growth plan if published without due consideration.

Economic analyst Karithi Murimi told Smart Company that this would injure the thriving business environment that Kenya enjoys in the construction industry.

“It would further make Kenya a no-go zone for foreign constructors who will flee to unregulated regional countries,” noted Mr Murimi.

Last week, the National Construction Authority announced that regulations that will curtail Chinese contractors’ participation in local construction are awaiting publication.

At least 30 per cent of the monetary value of a project should go to local contractors. This is possible through joint ventures or sub-contracting, the rules note.

NCA chairman Steven Oundo said the regulations only restrict foreign constructors to handling tenders under the cluster of NCA 1 contractors.

“This is the cluster of contractors who handle works that exceed Sh1 billion. By sharing 30 per cent of the value, they pass down the skills to Kenyan contractors who are usually locked out of big projects,” said Mr Oundo.

Mr Murimi, however, disputes the requirements of the Act, saying they are not in tandem with the developments that Kenya has made with China.

He argues that President Kenyatta is in deep trade pacts with China following withdrawal of aid by the West.

He cited Kenya’s main construction projects run by renowned Chinese companies. The Sh447.5 billion Standard Gauge Railway tender was awarded to China Roads and Bridges while the JKIA Greenfields terminal tender that is worth Sh56.5 billion was awarded to two Chinese contractors, Anhui Civil Engineering Group (ACEG) and China Aero Technology Engineering International Corp.

“The construction industry could contribute to 60 per cent of development countrywide. It brings in foreign direct investments, employs local people and leads to wider urbanisation,” said Mr Lemma Senbet, executive director of African Economic Research Consortium.

He foresees a situation where withdrawal of Chinese contractors could deeply hurt Kenya.