Local content is key to achieving Kenya’s economic growth goals – Business Daily
Economic growth concept. PHOTO | SHUTTERSTOCK
The Kenya economy has been lagging behind owing to cash flight to foreign countries and contractors. This is despite the same cash having been being generated in Kenya and in most cases paid through the Kenyan taxpayer. The technology and expertise gap between foreign and local contractors has also been quite wide.
This state of affairs has created the need to promote local content to support Kenyan local industries and citizen contractors.
It’s for this reason that we now have local content provisions in the Public Procurement and Asset Disposal Act 2015, the National Construction Authority Act 2011 and subsequent National Construction Authority Regulations 2014.
The NCA Regulations 2014, for example, provide that an application by a foreign contractor shall be accompanied by an undertaking in writing that it shall subcontract or enter into a joint venture with a local person or local firm for not less than 30 per cent of the contract value for which the temporary registration is sought and that it shall transfer technical skills not available locally to a local person or firm in such a manner as the authority may determine from time to time.
There is no doubt that effective implementation the local content provisions will help boost the capacity of and offer a lifeline to the citizen contractors and suppliers.
The provisions will also facilitate, bring home and retain the much-needed skills and technology transfer which has hitherto been left untapped and give the local players a bite of the lucrative big-ticket infrastructure projects making them attractive for upcoming and future projects financing.
This cherry has before been the preserve of foreign contractors from Japan, India, Germany, Dubai and now China who enjoy the benefits of cheap credit and finance from financial institutions and development finance agencies and corporations from their country of incorporation.
However, local content should not be emphasised where the skills and expertise don’t exist and also to the detriment of quality infrastructure. There is also the need to ensure competition and avoid undermining Kenya’s bilateral, regional and world trade treaty commitments.