Kenya Association of Manufacturers (KAM) has petitioned the government to enforce local content legislation in a bid to help domestic firms compete against foreign companies and capture the growing local opportunities. The manufacturing body pointed out that there is a lack of proper enforcement of the local content clause under the Public Procurement and Disposal Act that has created loopholes that favour foreign firms and importations a situation which is unsustainable for the promotion of local industries.
According to Phyllis Wakiaga, KAM CEO who was speaking during a tour of the modernized East African Cables Manufacturing Plant. The Act has faced considerable implementation headwinds which has led to the current situation, “We need to review policy and enforcement mechanisms on local content regulations, including the Buy Kenya, Build Kenya policy and other relevant laws and where appropriate, adjust policy to favour the participation of local companies in development projects,” said Wakiaga.
She continued to state that lack of amendment has created loopholes that have created a tendency to shut out local manufaucturing companies from development projects on the basis of capacity, quality and pricing. “Turnkey tenders are still being awarded to contractors who are not obliged to procure locally, while external manufacturers are preferred over local industries for international tenders due to their pricing advantage, influenced by their low power tariffs in the country of manufacture and economies of scale. We’ve also had cases of externally funded projects that demand for international tendering process that is in some circumstances duty exempt being used as loopholes to import goods and services available in the market leaving local players disadvantaged,” she added.
According East African Cables CEO Peter Arina, while local companies have marginally benefitted from development projects, they contribute to less than 10 per cent of the local demand, a situation creating operating below capacity and loss of jobs.
Kenya is battling to protect and promote the growth of its domestic industries by introducing laws that ensure local firms benefit from huge government spending. In 2013 the government introduced amendments to the Public Procurement and Disposal Act law requires all foreign tenderers participating in international tenders to source at least 40% of their supplies from local contractors.
According to the recently unveiled national industrial blueprint, the Government is keen to strengthen local content and capacity building of domestic companies that could yield up to Kshs 10 billion to 20billion (USD 100 to 200 million) in GDP and create 30,000 jobs in the economy.