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There are regulations in place to protect local contractors

By Harold Ayodo | April 28th 2016

We registered a construction company to bid for tenders to construct houses in counties three years ago. However, we do not seem to be lucky as majority of the bids/tenders favour our counterparts from foreign counties. We may have to close shop. Is there a law that regulates foreign firms locally and promote local construction companies?

F. Njoroge, Nairobi

Foreign construction firms must be registered locally and certify stringent conditions before undertaking multi-million shilling real estate projects. The National Construction Authority Act stipulates that foreign construction firms incorporated outside the country should be accredited before engaging in projects.

And in a bid to cushion local contractors from the expertise and financial muscle of foreign firms, specific lucrative contracts will be strictly  reserved for them. Some contracts are exclusively reserved for local contractors as opposed to open bidding, which attracts all interested bidders.

Construction goes on on Outering Road, Nairobi. The NCA ACT spells out terms for foreign contractors. (PHOTO: ELVIS OGINA / STANDARD)

Moreover, foreign contractors will only be eligible to register for a building contract above Sh500 million as oppossed to local contractors eligible for all categories of contracts.

Under the regulations a foreign contractor is defined as a firm incorporated outside Kenya or
incorporated in Kenya but 51 per cent of the shares are held by a non-Kenyan. According to the regulations, under a joint venture contract, it will be compulsory to recruit employees from the local labour market.

In cases where technical or skilled foreign employees are required, the foreign firms must seek prior written permission and approval of the national Construction Authority.

Foreign contractors must give a written undertaking that they will either, enter into a joint venture agreement with local contractors, or undertake to locally subcontract at least 30 per cent of the value of the contract.

According to the regulations, a breach of an undertaking has legal repercussions as the authority will be entitled to file a claim in damages against the foreign contractor.

According to provisions of the National Construction Authority Act, foreign construction firms must prove that they will only undertake specific contracted and certified works. They must also have a certificate of compliance from the Registrar of Companies confirming that they traded as qualified contractors before coming to the country.

The firms must swear affidavits that once their contracted works are completed and period of maintainance has elapsed, they will wind up and not engage in construction locally. In a move to crack down on cow boy contractors, the National Contruction Authority Board may require applicants to appear before it to produce documentary evidence of competence.

The legal restrictions also require the accredited foreign firms to only undertake construction work only for the agreed period.

When the permitted construction period expires, the firm will be deristered and return its registration certificate to the Board.

The Lands Cabinet Secretary in consultation with the board are also required to make regulations stating categories of construction contracts foreign firms can apply.

— The writer is an advocate of the High Court
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