In a significant move to bolster local businesses, the government plans to reserve all tenders valued at less than KES 1 billion exclusively for Kenyan firms. This initiative, part of proposed amendments to the Public Procurement and Asset Disposal Act of 2015, aims to support local firms facing stiff competition from well-funded foreign companies, particularly Chinese firms, in securing contracts at both national and county levels.
The amendments, currently tabled in Parliament, propose that foreign firms will only be eligible for contracts exceeding the KES 1 billion threshold. However, to bid on these larger contracts, foreign companies must form joint ventures with local firms, with the local partner holding at least 30% of the procurement value.
Treasury Cabinet Secretary John Mbadi emphasized the initiative’s commitment to fairness and competitiveness in the procurement sector. “These changes aim to enhance fairness, competitiveness, and transparency while addressing corruption, conflicts of interest, and abuse of office within the public sector,” he stated in a recent notice. The review, he added, reflects emerging issues, international best practices, and lessons learned since the Act’s enactment in January 2016.
The proposed amendments also mandate stronger transparency measures, including the disclosure of beneficial ownership. Companies will be required to submit this information annually, and entities that fail to comply for five consecutive years risk being declared inactive and removed from the official register. The government plans this measure to counter potential misuse of companies for activities such as corruption, money laundering, terrorism financing, and tax evasion.
In addition, procurement entities, including ministries and state departments, must upload contracts detailing beneficial ownership on the Public Procurement Information Portal. Companies that fail to meet the disclosure requirements by the deadline of November 30, 2024, will face a penalty of KES 500,000, with ongoing non-compliance subject to a daily fine of up to KES 50,000.
Failure to report any ownership changes within 14 days will also incur an administrative fine of KES 2,000
