The government is set to reserve all tenders valued at less than Kes.1 billion for Kenyan firms to protect them from well-funded foreign companies. This initiative is part of proposed amendments to the Public Procurement and Asset Disposal Act of 2015, which have been tabled in Parliament.
The goal of the proposal is to improve the competitiveness of local firms, which have struggled to compete against foreign companies, particularly Chinese firms, in securing tenders at both national and county government levels.
Under the proposed changes, foreign firms will still be eligible for contracts exceeding the Kes.1 billion threshold, but only if they form a joint venture with a local firm. In this case, the local firm must hold at least 30 percent of the procurement value.
In a notice, CS Mbadi stated that the Public Procurement and Asset Disposal Act 2015, which came into effect in January 2016, was due for review to align with emerging issues, international best practices, and lessons learned.
The public had until mid-last month to submit feedback on the proposed changes. Treasury Cabinet Secretary John Mbadi emphasized that these changes aim to enhance fairness, competitiveness, and transparency, while also addressing corruption, conflicts of interest, and abuse of office within the public sector.
The amendments could also introduce stronger sanctions for violations of procurement laws or new clauses to address evolving challenges. One key change includes the requirement for companies to submit beneficial ownership information.
Companies that fail to file this information for five consecutive years risk being declared inactive and removed from the register. This move is designed to prevent the misuse of entities for activities such as corruption, money laundering, terrorism financing, and tax evasion.
Additionally, procurement entities, including ministries and state departments, must upload contracts containing beneficial ownership details to the Public Procurement Information Portal.
Companies that fail to comply with the beneficial ownership disclosure requirement by the five-year deadline will face a penalty of Kes.500,000 after November 30, 2024. Continued non-compliance will incur a daily fine of up to Kes.50,000.
Entities must also report any changes in ownership within 14 days or face an administrative fine of Kes.2,000.
