Foreign contractors to cede 30pc stake to locals in new rules

By Nicholas Waitathu

Kenya: Foreign construction and building companies will be required to cede a minimum of 30 per cent of their ownership to local companies when establishing their offices in Kenya. The requirement that targets foreign companies is part of a raft of regulations that have been formulated by the Government to streamline the building and construction industry.

The regulations come at a time when foreign construction companies especially from China have dominated the local building and construction industry. The rules also seek to enhance training and research.

National Construction Authority (NCA) Vice Chairman Dr Isabella Njeri said the surrender of ownership by foreign companies would enhance skills and technology transfer. “Our aim as the authority is to ensure that there is level playing ground in the local construction industry. Our focus is to enhance the capacity of local contractors with the view to enhancing efficiency,” said Dr Njeri.

For the past decade, Chinese companies have been winning Government contracts especially roads, water, airports, energy, and communication projects.

Speaking during the celebrations to mark 20th Anniversary of the Institute of Quantity Surveyors of Kenya (IQSK), Njeri said the regulations have been adopted by industry players and will soon be tabled in Parliament for debate.

“Local- foreign joint ventures for construction works or projects to be on at least 30 per cent local and balance foreign save for where there is an existence of a mutual agreement between Government of Kenya and development partner funds or proceeds of the construction works shall be shared in line with the arrangements as in sub-regulation 10(1),” the draft regulations read in part. Further, foreign companies must competitively recruit from the local market contract employees.

Skilled workers

The regulations further say recruitment of foreign technical or skilled workers on such contracts shall be done on occasions when the skills are not available locally and subject to accreditation by NCA.

The Authority may give such exemption on this regulation, as the Board may deem appropriate.

Kenya Federation of Master Builders (KFMB) Chairman Moses Mwihia said the new regulations would reform the construction and building industry. “Once the local companies have been involved, they will gain the necessary capability and thus in future be able to handle mega projects,” said Mwihia.

He said the regulations would seek to empower the youth and women who are venturing into the construction industry. For example, Jubilee Government promised to allocate 30 per cent of all Government tenders to the youth and women.

Moses Nyakiongora, the chief Quantity Surveyor at the Ministry of Lands, Housing and Urban Development said foreign companies owing to their sound capability are able to bid for mega projects in the country.