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Local firms beg for protection from foreign competitors

By Moses Michira | Updated Mon, March 28th 2016 at 08:25 GMT +3

Local firms are begging the State for protection from foreign competition in public procurement, mostly in foreign-funded projects.

The firms through their lobby, Kenya Manufacturers Association (KAM), have petitioned the Government to enforce local content legislation to help domestic firms compete against foreign counterparts for opportunities at home.

KAM decried lack of proper enforcement of the local content clause under the Public Procurement and Disposal Act which has created loopholes that favor foreign companies and importation unsustainable for promotion of local industry.

“We need to review policy and enforcement mechanisms on local content regulations, including the Buy Kenya, Build Kenya policy and other relevant laws. Where appropriate, we need to adjust policy to favour the participation of local companies in development projects,” said Phyllis Wakiaga, the chief executive of KAM.

She was speaking during a tour of East African Cables manufacturing plants in Nairobi last week. While KAM did not specify the targeted projects, several of its members have separately claimed that they have been excluded in supplies to the multi-billion worth Standard Gauge Railway which is 90 per cent Chinese-funded.

Wakiaga claimed that the lack of amendments to the legislation had created loopholes which shut out local manufacturing companies from development projects on the basis of capacity, quality and pricing.

“Turnkey tenders are still being awarded to contractors who are not obliged to procure locally, while external manufacturers are preferred over local industries for international tenders due to their pricing advantage, influenced by their low power tariffs in the country of manufacture and economies of scale,” she said.

She added: “We’ve also had cases of externally funded projects that demand for international tendering process that is in some circumstances duty exempt being used as loopholes to import goods and services available in the market leaving local players disadvantaged.”

East African Cables CEO Peter Arina said local firms are contributing less than 10 per cent of the domestic demand, a situation creating operating below capacity and loss of jobs.

“We implore KAM to continue its efforts of ensuring a equitable playing field for local manufacturers, “ said Arina.