Local suppliers to win bigger share of tenders in review

Kenyan suppliers are set to win a big share of the billions of shillings worth of tenders that the government floats each financial year as the country moves to review the raw material rule to recognise products made from imports.

Goods made locally from foreign inputs will now qualify for preferential treatment in awarding government-funded tenders as long as the raw materials are not available in Kenya.

This is a shift from the past where the Public Procurement and Disposal Act (PPOA) of 2005 has only allowed goods wholly manufactured, mined, extracted or grown in Kenya to qualify for National Preference and Reservation scheme.

“We have realised that some of the local suppliers such as furniture makers and motor vehicle assemblers are still locked out of the National Preference Scheme by PPOA since their goods rely on imports,” Celestine Otunga, director of procurement, Ministry of Finance.

Under the new proposal, suppliers of goods made from imported parts or raw materials will have to obtain confirmation from Industrialisation and Trade ministries certifying that parts or raw materials imported are not available before qualifying for the preferential schemes.

Direct competition

The scheme reserves at least 15 per cent of all tenders to domestic suppliers and contractors, cushioning them from direct competition with foreign firms.

The new review comes at a time that private sector players have complained of lack of transparency, delayed payments and poor monitoring system for public contracts. “These problems have significantly reduced local participation in public contracts,” said Patrick Obath, chairman of Kenya Private Sector Alliance (Kepsa).

The new changes are expected to boost furniture makers who have failed to qualify for supply tenders since they use timber imported from Comesa countries of Malawi, DRC, Tanzania and Uganda following the ban on logging in 1999.

The government last year issued directive to all public institutions to give preference to local furniture makers in any of their tenders.

“It has never been implemented as most government departments still prefer furniture from Asian countries like Malaysia and China,” Mr Albert Muasya, project manager at Likoni Furniture told the Business Daily in an earlier interview.

The new proposal is also set to open markets to new assemblers who have been locked out because they rely on imported parts.

Finance Minister Uhuru Kenyatta has since extended the scheme to cover contracts floated by counties, constituencies and local authorities through the legal notice number 58 issued on June 8.

“These schemes are necessary to promote local participation in government tenders as we open our procurements to our partners in trading blocs,” Mrs Otunga said at a Comesa Procurement Seminar organised by Kepsa in Nairobi Wednesday.

In a speech, treasury PS Joseph Kinyua said the government was also aligning its procurement legislation with the Comesa framework to open local tenders to other suppliers from the 19 countries that make up the bloc.

“Kenyan suppliers should also take advantage of the country’s membership of EAC and Comesa to tap increased opportunities brought about by the procurement reforms,” said Mr Kinyua.

Mr Isaac Ndahiro, Comesa’s procurement expert said the preferential schemes were not unique to Kenya as other member states have also used them to ring fence portion of the government funded tenders to local suppliers.

“We expected these schemes to be applied transparently to ensure that member states to not hide behind them to promote protectionist tendencies,” said Mr Ndahiro, adding that a harmonised cross-border procurement is of great benefit to private sector.