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Kenyan firms to be given priority

BUSINESS NEWS
By Wainaina Wambu | June 13th 2020

The government is set to review contracting framework for infrastructure projects to boost the role of local contractors.

This will give local contractors a key role in utilising the Sh172.4 billion set aside for infrastructure projects in the new financial year.

Presenting the Sh2.79 trillion budget on Thursday, Treasury CS Ukur Yatani acknowledged that foreign companies had largely benefited from Kenyan infrastructure construction projects and said that this would be rectified in order to spur job creation.

Contracts for mega government projects, including rail and roads, have been awarded to Chinese companies.

China is the single largest financier of the country’s infrastructural projects and Kenya is set to spend Sh904 billion on debt repayment to China.

“The government is aware that local contractors, in general, have had challenges of undertaking infrastructure construction projects due to limited technical, financial and managerial capacity.

“This has encouraged participation of foreign contractors in local contracts at the expense of local contractors,” Yatani said.

Infrastructure budget

The Sh172.4 billion set aside in the budget for infrastructure will cater for roads, railways, ports and airports.

“The government continues to scale-up the construction of a robust network of high-quality roads, railways, sea and airports to enable Kenyans enjoy the benefits of expanded infrastructure assets and improve our competitiveness,” the CS said.

In the infrastructure project, Sh18.1 billion was set aside for SGR Phase 2, Sh6 billion for the LAPSSET project and Sh5 billion for the Mombasa port development project.

To ensure contribution to the maintenance of the country’s infrastructure, Yatani proposed introduction of a minimum tax payable by all companies at one per cent of their gross turnover.

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